If you are stuck in such a situation, here is what to do.

A few years ago, Mr. Alok Verma and his father, Mr. Suresh Verma, jointly booked an apartment in a new development project by ‘Apex Developers’. To finance this purchase, they availed a home loan from ‘Prime Finance Bank’ for a significant portion of the property’s value. Since Alok was working abroad at the time, the loan was sanctioned based on his father’s income documents, although the EMIs were consistently debited from Alok’s savings account from the very beginning.

Alok has maintained a perfect repayment record, never missing a single EMI. He also made several prepayments, substantially reducing the outstanding loan amount to about half of the property’s current value. Tragically, his father, Mr. Suresh Verma, passed away several months ago. The apartment is now ready, but its registration is pending. The developer has stated that for the property to be registered solely in Alok’s name, a No Objection Certificate (NOC) from Prime Finance Bank is mandatory to remove his late father’s name from the documents.

When Alok approached the bank, they requested his current salary statements. He explained that he had recently returned to India and was in the process of establishing his own business. He also informed them that he planned to rent out the apartment, and the expected rental income would cover almost the entire EMI. The bank official then asked for details of his other assets and income sources, which Alok provided via email. He also reiterated that the loan is secure, as the property itself serves as collateral and is already 50% paid for. However, the bank has been unresponsive for over a week, leaving Alok uncertain about how to proceed and whether his position is legally sound.

Advice in such cases

Dealing with a bank after the death of a co-borrower can be a sensitive and complex process. The bank’s primary concern is the security of its loan. Here is some practical advice:

• Review Your Loan Agreement: Carefully examine the terms and conditions of your loan agreement, specifically looking for clauses related to the death of a co-borrower. This will outline the contractual obligations of both parties.
• Formal Written Communication: All communication with the bank should be in writing (email or registered post). This creates a formal record of your requests and the bank’s responses (or lack thereof).
• Provide Essential Documents: Proactively submit a copy of your father’s death certificate and a legal heir or succession certificate to the bank. This formally establishes you as the legal successor.
• Present a Clear Financial Picture: Clearly articulate your current financial standing. Provide documents related to your new business, other assets, and a projection of the rental income. The goal is to reassure the bank of your ability to service the loan independently.
• Propose Alternatives: You could offer to add another credit-worthy family member as a co-borrower or guarantor if the bank remains apprehensive about your new business income.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

Applicable Sections of Law

This situation is governed by civil laws, primarily contract, property, and succession law. Criminal statutes like the Bharatiya Nyaya Sanhita (BNS) are not applicable here.

• Indian Contract Act, 1872: The loan agreement is a contract. Section 42 of the Act states that when two or more persons make a joint promise, the liability to perform it rests with them jointly during their joint lives, and after the death of any of them, with the representative of the deceased person jointly with the survivor(s). This means the liability to repay the loan now falls on you and your father’s estate.
• Transfer of Property Act, 1882: This Act governs mortgages. The bank has a right over the property as a secured creditor until the loan is fully paid. Their consent (NOC) is required for any change in the title that might affect their security interest.
• Indian Succession Act, 1925: This law governs how the assets and liabilities of a deceased person are passed on to their legal heirs. Your father’s share in the property and his liability in the loan devolve upon his legal heirs.
• Reserve Bank of India (RBI) Guidelines: Banks are bound by the RBI’s Fair Practice Code, which mandates them to act transparently, fairly, and respond to customer queries and grievances in a timely manner. Unreasonable delays can be grounds for a complaint.

If you are the complainant

If you are facing a similar situation where the bank is being uncooperative, you can take the following steps:

• Gather all your documents, including the loan agreement, property papers, proof of all payments made, the death certificate, and all written communication with the bank.
• Send a formal letter to the bank’s branch manager and regional head, clearly stating your request for the NOC and outlining your financial capability to continue the loan. Give them a specific timeframe (e.g., 15 days) to respond.
• If the bank fails to respond or gives an unsatisfactory reply, you should escalate the matter to the bank’s internal grievance redressal mechanism or nodal officer.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think
• Your lawyer can send a strong legal notice to the bank, which often prompts a faster resolution.
• If the issue persists, you can file a formal complaint with the Banking Ombudsman, an authority that resolves disputes between banks and customers.

If you are the victim

As the surviving co-borrower, you are a victim of procedural delay and the bank’s risk aversion. Your rights as a customer are being affected.

• You have the right to a timely response and fair treatment from the bank as per RBI guidelines.
• You have the right to have your father’s name removed from the loan and property documents upon fulfilling the necessary legal and procedural requirements.
• If the bank’s delay causes you financial loss or mental anguish (e.g., inability to register and rent out the property), you may have grounds to file a complaint in the Consumer Dispute Redressal Commission for ‘deficiency in service’.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think

How the police behave in such cases

This is a purely civil matter concerning a contractual obligation between you and the bank. The police have no jurisdiction or role to play in such disputes. Police intervention would only be warranted if there were allegations of criminal acts like fraud, forgery, or criminal intimidation, none of which are present in this scenario. Approaching the police would be futile and inappropriate.

FAQs people normally have

• Can the bank legally refuse to issue the NOC?
  The bank cannot arbitrarily refuse the NOC. However, they can delay it while they reassess the risk associated with the loan now that there is only one borrower whose income stream has changed. They must act reasonably and within the framework of the law and their own policies. If they find the loan is no longer secure, they might ask you to provide additional security or bring in a new co-borrower.
• Is a succession certificate mandatory?
  In most cases, yes. The bank needs legal proof that you are the rightful heir to your father’s estate (which includes his share in the property). A succession certificate or a legal heir certificate issued by a competent authority is the standard document required.
• Does my perfect repayment history not matter to the bank?
  It certainly helps and strengthens your case, demonstrating your creditworthiness and intent to repay. However, the bank’s assessment is forward-looking and focuses on your future ability to pay, which is why they are concerned about your new business venture.

What evidence is required?

To effectively pursue your case with the bank or any other authority, you should have the following documents ready:

• The original Loan Agreement and all related sanction letters.
• Property documents (Agreement for Sale, Allotment Letter from the builder).
• Death Certificate of the deceased co-borrower.
• Legal Heir Certificate or Succession Certificate.
• Proof of all EMI payments and prepayment receipts (bank statements).
• Copies of all written communication (letters, emails) with the bank.
• Documents supporting your current financial status (business registration, bank statements, ITRs if any, details of other assets).

How long will the investigation take?

This is not a police investigation but a procedural matter. The timeline can vary:

• Directly with the bank: A resolution can take anywhere from a few weeks to a couple of months, depending on their internal processes and efficiency.
• Through the Banking Ombudsman: If you file a complaint, the process usually takes 1 to 3 months to reach a resolution.
• Through a Consumer Court or Civil Court: This is the longest route and should be considered a last resort. Such cases can take several months to years to be decided.

Advocate Sudhir Rao, Supreme Court of India