A guide for changing loan repayment method
To repay a loan, usually three types of payment methods are allowed — standing instructions, post-dated cheques and electronic clearing service
Many of us have loans to repay to banks and non-banking financial institutions. In case you want to change the repayment method, here are the steps to follow.
To repay a loan, usually three types of payment methods are allowed — standing instructions, post-dated cheques and electronic clearing service.
Standing instruction
In case you want to change the mode of payment of EMIs from ECS or post-dated cheque to standing instructions follow this process.
Make a request to issue a request form for change of repayment instructions. Issue three cheques favouring “Lender Bank with Loan Account No.”, each filled with a value equal to the sum of 3 EMIs.
In case a bearer submits the request on your behalf, a bearer authorisation along with KYC documents also have to be provided.
ECS instructions
In case you want to change the mode of payment from standing instructions or post-dated cheques or ECS, request for the form for swap of repayment instructions. Issue a security cheque favouring “Lender Bank with Loan Account No.”
ECS mandate duly filled in and verified by the banker itself is required and swap charges of Rs 500/- favouring “Lender Bank with Loan Account No” have to be paid too. Besides you need to issue one security cheque for every 6 EMIs.
The amount on each security undated cheque should be equal to the sum of 3 EMIs.
For example, if your EMI amount is Rs 1,000 and you have to pay 18 EMIs for 36-month loan tenure, you need to submit three security cheques of Rs 3,000 each.
In case a bearer submits the request on your behalf, a bearer authorisation along with KYC documents (self-attested copy and original for validation) of the bearer will also need to be provided.
Post-dated cheques
This procedure is allowed only if the bank doesn’t have ECS facility. In case you want to change the mode of payment from standing instructions or ECS to post-dated cheques, you have to make a request to issue the form for swap of repayment instructions.
Like previous one, revised post-dated cheque in favour of “Lender Bank with Loan Account No.” for the balance EMIs has to be issued.
Swap charges of Rs 500 should also be paid in favour of the lender bank with concern loan account number.
In case a bearer submits the request on the person behalf, a bearer authorisation along with all KYC documents will also need to be provided at the bank.