Get the loan closed
if bank refuses to issue NOC complain to bank ombudsman
in alternative fine complaint against bank before consumer forum seek orders to direct bank to issue NOC and return original documents of title
Unable to close home loan account and get NOC
I have two home loan accounts with the same bank for two different properties. One I have paid off and trying to close and the other is in NPA mode. In NPA because the builder has stopped development stating lack of funds and when asked and chased by the police he committed suicide and a court case is running since last 5 years in DRT as the bank want the funds to be recovered. The bank had also committed serious due diligence while approving the loan as the builder was long in the bankrupt list and did not have his license in a renewed state during loan approval (the build license is still not renewed). Now, I am planning to sell my property linked to the first loan which is running smoothly. Initially the bank said as there is another NPA we will not be able to transfer the loan to the new owner and I need to pay the remaining amount and close it to get NOC. I did the same and paid Rs 12 Lanks remaining but then the bank said they are unable to close my 1st loan due to their internal issues. They took around 1 month and finally two days back they came back saying they will be able to close the 1st loan but no NOC or bank papers will be provided. Which does not benefit me as I will not be able to sell the property without the papers. Kindly let me know if this is legal from the bank's side to offer to close the loan but not give NOC or property papers? Will I be able to close my 1st loan account and get the papers with the case still running with the 2nd loan?
Asked 8 months ago in Property Law
Religion: Hindu
14 Answers
Bank has no right to keep two securities against a loan account. File a complaint with Ombudsman or complaint in consumer court
Both the loans are different bank can’t put you that condition. You can file consumer complaint against bank for deficiency of service
The bank is not right
If you have repaid the entire loan then the bank must release your original title documents and provide a loan foreclosure letter
What the bank is essentially trying to do is to mark its lien on your papers related to the loan which is fully repaid , as a security for the loan which is still outstanding, which is outright illegal
Both the loan transactions are independent of each other
You had provided distinct properties as security for the 2 loans
So the bank cannot apply the property /security for which the loan is repaid, on the other loan which is still outstanding
If the bank is a PSU then please file a writ petition in HC
If it's a private lender then you will probably have to file an application in the DRT court
this is a clear case of bank fraud. Bank is bound to issue NOC as well as delivery of documents. Send legal notice to bank and if bank failed to adhere the demand, file consumer case.
It is important that you communicate this issue with the bank and insist on receiving the necessary paperwork to complete the closure of the loan. If the bank continues to refuse to provide the NOC and property papers, you may need to seek legal advice or assistance in resolving the issue.
It is also important to note that the ongoing court case and NPA status of the second loan should not affect your ability to close the first loan and receive the necessary paperwork. Each loan and property should be treated separately, and the bank should not withhold documents for one property based on issues with another property.
The bank cannot refuse to return the property papers after closing that loan.
They have provide NOC and no due certificate once you have discharged the entire loan amount of that particular loan.
You issue a legal notice to the bank demanding the papers since the loan has been closed, failing which you can appraoch consumer redressal commission to get your grievances redressed.
you will not get any relief from banking ombudsman because they are toothless and they will not pass any order against the bank in such aspects.
Dear client, you can a complaint with RBI by RBI banking ombudsmen. After filing a complaint the RBI will take the appropriate action and get you the NOC. If the issue isn't solved there then you can file a complaint in the consumer forum.
What the lender bank is proposing is totally illegal and you can force them to issue NOC and get all your originals titled deeds back from bank. Let the bank first close you loan account, obtain proof of closure of loan from bank. Issue a lawyer's notice seeking NOC and return of document. Thereafter approach District Consumer Commission under Consumer Protection Act, 2019. District Consumer Commission will issue direction to bank to issue NOC to you ang return you documents. You will get NOC, documents, compensation for mental harassment, cost of complaint and lawyer’s fee.
- As per Kerala High Court, once loan is repaid, bank cannot withhold title deed merely because mortgagor transferred property and also due to any reason.
- Since, you have already refunded the first loan amount then the bank cannot withhold the property title deed due to the second loan NPA
- You can send a legal notice to the bank and also can lodge a complaint before the RBI against the said bank.
- If no positive response, then file a complaint before the Consumer Forum on the ground of deficiency of services
Thank you all for such valuable responses. I have been following this up with the bank and they are still making me go in circles. As I do not stay in India hence things are getting tougher. The bank is sticking to one point stating that as per RBI rule if one loan is NPA then all loans with the same bank becomes NPA. So, to pay out one loan and close it to get papers all other loans need to close even if a ongoing court case is running in DRT. Kindly help me understand what is the law in this regard. For your reference the bank was talking about the following: https://www.moneycontrol.com/news/business/if-you-default-on-one-loan-your-other-loans-from-the-same-bank-too-may-become-npas-6408411.html
Asked 5 months ago
NPA classification is borrower wise and not account wise. Hence if one loan account of the borrower is classified as NPA, all other loan accounts of the borrower also will be classified as NPA
This is because the Reserve Bank of India rules require banks to follow NPA classification at a borrower level and not at a product level.
If a borrower defaults on a bank loan, his other loans drawn from the same bank too may become non-performing assets (NPAs) affecting the customer's credit worthiness.
Since this is a RBI rules, the banks cannot deviate from the set of rules or guidelines in this regard.
All loans may be tagged as NPAs even if the customer is prompt on the repayment of other loans to the same bank. For example, if you default on a credit card loan to a particular bank, your home loan or car loan in the same bank, on which the loan repayment is prompt, may also become a bad loan.
- As per the RBI , NPA classification is borrower wise and not account wise. Hence if one loan account of the borrower is classified as NPA, all other loan accounts of the borrower also will be classified as NPA.
Dear Client,
According to RBI guidelines, if one loan account of a borrower becomes a Non-Performing Asset (NPA), all other loan accounts with the same bank are also classified as NPA. This is done on a borrower-wise basis, not account-wise. The rationale is that if a borrower defaults on one loan, their creditworthiness is compromised, impacting their ability to repay other loans as well. However, this rule does not negate the bank’s responsibility to provide necessary documents once a loan is fully repaid. File a formal complaint with the bank’s grievance redressal cell, requesting the NOC and property papers. If the bank doesn’t resolve the issue, escalate it to the Banking Ombudsman through the RBI’s website. As a last resort, file a complaint in the Consumer Forum for redressal. Should you require any further clarification, please do not hesitate to contact us.