Borrowers often find it tough to know the exact cost of a loan and often realise that there are some “hidden surprises“.
“At present, banks disclose all charges on a term sheet. However, an ordinary borrower does not always read the four-five pages of terms and conditions, so we have already mandated this document in microfinance and digital lending. We are now asking this for all lenders,” said RBI governor Shaktikanta Das.
The move aligns with RBI’s commitment to foster greater transparency and disclosure, ensuring consumers have necessary information to make informed decisions. With upfront disclosure of charges associated with loans, consumers can better understand actual cost of borrowing, mainly in case of some short-term low-value loans where outgo on charges is almost equal to interest rates.
