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RBI Circular on Key Facts Statement for Loans Advances.

India’s central bank, The Reserve Bank of India (RBI), plays a very important role in regulating and ensuring transparency in the retail credit market. Amongst other things, the RBI’s objectives are to maintain stability of the financial system, which includes monitoring the growth of retail and Micro, Small & Medium Enterprises (MSME) loans. Typically, retail / MSME segment borrowers have smaller credit requirements with limited credit information being available for evaluation as compared to large corporate borrowers. Whilst the RBI implements various measures to regulate retail / MSME credit, one of the important tenets of these measures is to promote transparency such that the retail / MSME borrower is aware of various economic and non economic features of the product. The underlying principle for this approach of the RBI is to ensure that customers are treated fairly. We sincerely hope you find the enclosed publication informative, offering insights into the recently released RBI notification, its applicability and some key considerations around transparent lending practices that RBI is promoting especially for retail /MSME borrowers. It will be for the RE to implement this notification and ensure that their disclosure practices help them reach a positive response and establish trust with its borrowers.

In this Early impressions publication we have analysed the RBI (India’s central bank). The RBI strongly supports equality and fairness amongst lenders. This includes fairness in lending processes. This publication discusses our views on their recent notification to enhance this practice for retail/MSME borrowers.

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