A Guide on Bank loan take over process

Loan customers may think possibility of transferring loan to more customer friendly bank, sometimes, reasoning better interest rate, relaxation of fine imposing etc. When they think about taking a loan, there may not have studied various bank’s terms, conditions, and policies.

After starting repayment of some installments, they would have learned about their bank’s merits and demerits. If another bank has better offer, they can transfer loan to another bank, if current bank allows and economically beneficial.

Though here is an example of State Bank of India’s procedure being followed for take over process, this, documentation is not only applicable to SBI but almost all banks functioning in India. Though list is considered as general requirement, slight variation / addition are applicable depending on the nature and type of banks.

In general, following are the documents initially takeover bank seeks.

1. Original Sanction letter of financier.
2. A/c statement of the financier for entire tenure of the loan.
3. Copy of title papers in the name of applicant.
4. Possession certificate –where house is complete, and repayment has started.
5. Detail of interim security (preferably fixed deposit of relatives or friends equivalent to loan amount).
6. Foreclosure letter.
7. List of documents held by the financing institute.
8. Letter undertaking to issue NOC, from the current lender bank / financier.
9. Project cost will be sale deed + stamp paper + prepayment penalty.

OTHER:

• Cheque for NEC / Valuation / IT verification fee and processing fee.
• For taking over any account, Banks must put in place, a Board approved policy with regard to take over of accounts from another bank as advised by RBI in its letter Dt.10/05/2012 to all Scheduled Commercial Banks.
• The above advisory must be incorporated in the Credit Policy /Takeover Policy of the bank.
• A copy of Board approved policy sent to Finance Department for information & record.
• Normally, loan accounts having credit ratings above the level approved by the Board should be taken over subject to the precautions to be taken in the light of CVC’s observation.
• The concessionary facilities in taken over borrow accounts should be extended only in extremely deserving cases with specific reasons recorded in writing.
• In all cases of takeover of accounts, it is necessary to do proper due diligence including visits to the premises of the customer if needed, before the account is considered for takeover by Bank.
• The guidelines of joint lending should be strictly applied in all cases where the borrower seeks to have additional exposure from the bank after take over.
• No cases should be taken over by a Bank from any Bank where any of its ED or CMD have worked earlier.
• In case, any such account need to be taken over, the proposal is to be put up to the precautions to be taken in the light of CVC’s observation.
• No cases should be taken over by a Bank from any Bank where any of its ED or CMD have worked earlier. In case, any such accounts need to be taken over, the proposal is to be put up to the Board with specific reasons justifying the need for taking over the account.