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FAQs on Refund of Interest on Interest – V1.0.0

What is the “Interest on Interest Refund” guideline as released by IBA & RBI?

Supreme Court has pronounced a judgement in March 2021 wherein it has directed that compound / penal interest charged on loans during the moratorium period be refunded. Accordingly RBI directed financial institutions to refund difference between compound and simple interest charged on loan accounts which availed moratorium period of March 2020 to August 2020. Indian Banks Association (IBA) laid down the detailed guidelines in April 21 which are to be followed by institutions.

As part of the COVID-19 package announced by RBI in March 2020 (and extended in May
2020), customers who had a loan outstanding as on 29th February 2020 which was less than 90 DPD as on 29th February 2020 were given a relief of one time moratorium of repayment for a cumulative period of6 months i.e. from March 2020 to August 2020. During the moratorium period, the customers were exempt from making any payment to the lender. During moratorium, the lenders compounded the interest due on a monthly basis. Thus, the loan outstanding at the end of moratorium period included the outstanding principal at the beginning of the moratorium and the compound interest thereon for the months for which moratorium was availed, termed as “Interest on Interest”- difference between the simple interest and the compound interest charged during moratorium period.

PNBHFL had also compounded the interest for the moratorium period for the customers who availed the moratorium. Accordingly the Interest on interest will be refunded.

Which all loans/facilities are eligible for refund under the RBI Circular?

All “standard accounts” have to be given the benefit of relief. The determination date for this purpose is 29th Feb., 2020. That is, the days past due (DPD) status should be less than 90 DPD as on 29.02.2020 (“Eligible Accounts”).
Accounts not eligible for Relief under RBI Circular:

  • Accounts classified as NPA as on 29 February 2020 ;
  • Loan facilities which were charged with simple interest ;
  • Accounts already refunded interest on interest under ex-gratia scheme of Nov’20* ;

Thus,

  • Refund will now be given in those loan accounts (standard as on 29.02.2020) which were left out in the Ex-Gratia 1 scheme of Oct-Nov 2020. This will include ;
    • All Loans* (standard as on 29.02.2020) where the exposure (disbursement) was > INR 2 crore.
    • All Loans* (standard as on 29.02.2020) where the exposure (disbursement) was<= INR 2 crore but the market exposure (basis CIBIL) was > INR 2crores.

    * Both retail and corporate finance loans will be eligible

  • Loans irrespective of whether they availed the moratorium or not will be eligible. However, interest on interest is to be refunded only if it was charged. Not applicable on PNBHFL since no interest on interest was charged in such cases.

If an exposure was standard on 29 Feb 2020 but became NPA in the next few months, will we process refund?

Yes, As loan was standard (not a NPA) on 29/02/2020 and had availed the moratorium, it will be eligible for refund of interest on interest irrespective of the fact that it became a NPA later on.

In case a Customer did not avail the moratorium in respect to the loan facility and defaulted on its EMI during the moratorium period, will he/she be covered under the RBI Circular?

The refund of interest on interest is available to the Borrower under RBI Circular, irrespective whether the moratorium has been availed or not by such Customer. However, as per the detailed guidelines of IBA, the interest on interest is to be refunded only if it has been charged.

PNBHFL does not charge compound interest on normal loans. Thus, no interest on interest was charged on loans which did not avail the moratorium. Hence, no refund is due on such accounts.

Will penal interest charge during this period will be refunded?

During moratorium period, charging of penal interest was suspended in all PNBHFL loan accounts for the moratorium period. Accordingly, no refund /waiver will be processed.

What calculation methodology has been used for arriving at the Interest on Interest amount?

  • The calculation of interest on interest has been done on daily balance. Any subsequent disbursement/ prepayment made during the moratorium period has been considered for calculation.
  • Actual interest rate prevailing as on a specific date has been considered for calculating interest on interest. Any change of rate taken place during moratorium period has been considered.
  • The interest on interest will be refunded only to the extent that it has been charged. For partial moratorium cases (customers who took moratorium for less than 6 months) and for the foreclosed cases (paid off during moratorium period), the interest on interest will be refunded only for the period of moratorium when the compound interest was charged and the loan was live.

What is the exact manner of passing on the benefit to the Borrower? Is it merely
a credit to the account of the borrower, or does it lead to any cash benefit being transferred to the borrower?

In case of Live loan account, the benefit amount will be given in the form of pre-payment by adjusting the differential amount with the future payables by the borrower.

In case of Closed loan account, the benefit amount shall be refunded in the form of remittance to the borrower’s repayment account as updated in our records.

FAQ’s on Resolution Framework 2.0

What is the purpose of Resolution Framework 2.0 announced by RBI?

The purpose of this framework announced on May 5, 2021 vide respective RBI circulars, is to provide relief to individuals, small businesses and entities registered as MSME whose operations have been adversely affected by the second wave of Covid-19 pandemic followed by lockdown in most of the states.

Part A. Resolution framework for Individual and Small Businesses

Who is eligible for restructuring under this scheme?

a) Individuals who have availed of personal loans, and which include loans given for creation/enhancement of immovable assets (e.g., housing, etc.).

b) Individuals who have availed of loans and advances for business purposes and to whom the lending institutions have aggregate exposure of not more than Rs.50 crore as on March 31, 2021.

c) Small businesses, including those engaged in retail and wholesale trade, other than those classified as micro, small and medium enterprises as on March 31, 2021, and to whom the lending institutions have aggregate exposure of not more than Rs.50 crore as on March 31, 2021.

Provided further that the credit facilities / investment exposure to the borrower was classified as standard as on March 31, 2021.

Whether borrowers covered under resolution framework 1.0 will be eligible for further restructuring under this scheme?

No, the borrower accounts which were restructured earlier will not be covered under the resolution 2.0. However, if the restructuring plan implemented under resolution 1.0 for personal loans, permitted no moratorium/moratorium of less than 2 years, the said account can be restructured under this scheme provided the overall moratorium allowed/tenor extended shall not be more than 2 years.

The overall caps on moratorium and / or extension of residual tenor granted under Resolution Framework – 1.0 and this framework combined, shall be two years.

What are the restructuring options that are available to me?

The resolution plans may include rescheduling of payments, conversion of any interest accrued, or to be accrued, into another credit facility, additional term facility or, granting of moratorium, based on an assessment of income streams of the borrower, subject to a maximum of two year term.

Part B. Resolution framework for Micro, Small and Medium Enterprises (MSME)

Who is eligible for restructuring under this scheme?

a. Micro, Small or Medium Enterprise as on March 31, 2021 in terms of the Gazette Notification S.O. 2119 (E) dated June 26, 2020.

b. The borrowing entity is GST-registered on the date of implementation of the restructuring. However, this condition will not apply to MSMEs that are exempt from GST-registration to be determined on the basis of exemption limit obtaining as on March 31, 2021.

c. The aggregate exposure, including non-fund based facilities, of all lending institutions such borrowers does not exceed INR 50 crore as on March 31, 2021.

d. The borrower’s account was a ‘standard asset’ as on March 31, 2021. The borrower’s account was not restructured in terms of the circulars DOR.No.BP.BC/4/21.04.048/2020-21 dated August 6, 2020; DOR.No.BP.BC.34/21. 04.048/2019-20 dated February 11, 2020; or DBR.No.BP.BC.18/21.04.048/2018-19 dated January 1, 2019 (collectively referred to as MSME restructuring circulars) or the circular DOR.No.BP.BC/3/21.04.048/2020-21 dated August 6, 2020 on “Resolution Framework for COVID-19-related Stress.”

What are the restructuring options that are available to me?

The resolution plans may include rescheduling of payments, conversion of any interest accrued, or to be accrued, into another credit facility, additional term facility or, granting of moratorium, based on an assessment of income streams of the borrower via ITRs, GST returns bank statements and any other document submitted by the customer.

Part C. Common Points applicable on both the frameworks (A & B)

What are the timelines allowed under this scheme?

The request under this scheme shall be invoked by 30th September, 2021 and the same should implemented within 90 days of invocation.

What is the criteria for restructuring and do I need to submit any documents to avail of the restructuring benefit?

The eligible borrowers (as permitted by RBI) should have been impacted by COVID-19, impacting their ability to service the loan in time, indicatively due to loss of job or decline in source of income, disruption in business activity and loss of revenue for self-employed customers etc.

With respect to above, the following documents will be required for evaluating the restructuring proposal:

a. Request Letter from customer (to be signed by all applicants)

b. KYC documents of the applicants (Self attested)

c. Latest salary slips for salaried customers (last 3 months)/proof of job loss or pay cut

d. ITRs and financials along with required annexures for FY 2019-20 & FY 2020-21 (if ITRs filed)

e. Latest GST returns for self-employed customers for last 12 months

f. Last 1 years’ bank statement of salary/operating business account

g. Any other documents / information as required by the Company during the credit appraisal process

Will opting for the restructuring package have an impact on my credit bureau report?

As per regulatory guidelines, loan/credit facility will be reported to the credit bureau as “Restructured due to COVID-19”.

Please note that as per regulatory guidelines, restructuring has to be reported at a Borrower level to the credit bureaus and hence all the facilities / loans of the borrower with the bank will be classified and reported as “Restructured” even if the borrower has taken restructuring for only one loan.

Will there be any additional cost of availing loan restructuring?

As clarified in Question #6 above restructuring may include rescheduling of payments, conversion of any interest accrued, or to be accrued, into another credit facility, additional term facility or, granting of moratorium each of which has additional cost implication.

I hold multiple loans/credit facilities with PNBHFL. Do I have to apply separately for each of these loans?

No, A single application form will suffice the restructuring request depending upon single / all linked loan accounts selected by the Customer. The assessment of the application will be done basis the regulatory guidelines on the COVID-19 impact and the viability of the repayment plan before arriving at any decision.

I have applied for restructuring, how will I come to know the status of my application?

The decision taken by the Company shall be communicated to the customer within 30 days of receipt of application.

Are all the Co-Borrower/s of the original Loan agreement required to sign the revised restructuring agreement?

As per regulatory and legal requirements, all Borrowers/Co-borrowers of the original loan need to agree and sign on any changes in the loan structure including the restructuring agreement.

How do I avail the restructuring benefit on my loan?

In order to apply for restructuring following channels are available

a. Please log on to the Website www.pnbhousing.com and submit request on the RETSRUCTURING 2.0 section or

b. Please submit the request in the nearest branch or

c. Please contact us on 1800 120 8800 or

d. email us at customercare@pnbhousing.com.

Please note that restructuring of loan will be done at discretion on PNBHFL basis agreement on mutually acceptable terms. As mentioned above the decision will be communicated within 30 days of application.

Conversion options for interest rate reduction for Existing Customers

You can reduce the existing rate of interest of your Home Loan and Non Home loan by availing our conversion option.

With this option, you can reduce the applicable rate of interest on the loan (by changing the spread or switching between schemes) through our Conversion Facility.

You can take the benefit of the conversion facility, by paying a conversion fee plus applicable goods & service tax on your outstanding loan amount and opt for either reducing your monthly instalment (EMI) or loan tenure. Terms and conditions apply.

To avail of our conversion facility and to discuss the various options available request you to:

  1. Send us an email on customercare@pnbhousing.com;
  2. You may also visit our customer portal (link) or call our customer care at18001208800 for any further details in this regard.
  3. You can also visit our loan servicing branch to avail the conversion facility.

Conversion facility will be extended to you subject to clear repayment track record and submission of all mandatory documents related to collateral security/repayment instruments.

Following documents will be required for availing conversion facility:

  1. Conversion Agreement, click here to download the document.
  2. Cheque/DD for payment of conversion fees.
  3. Identity proof of applicant and co-applicant (if applicable).

Further please note signature of applicant and co-applicant (wherever applicable) is required on all pages of conversion document.

The following options of conversion are available to existing customers of PNB Housing:

Switch to a lower Interest Rate for Home Loans*:

For Housing Loans, the fee payable to avail the conversion shall be 0.50% plus applicable taxes of the principal outstanding or ₹5,000 plus applicable taxes, whichever is lower.

*In respect of under construction case, for partially disbursed loan, proof of start of construction to be taken in the form of declaration from the applicant, along with supporting latest photograph of the property site showing the construction progress.

Switch to a lower Interest Rate for Non Home Loans:

For Non Housing Loans, the fee payable to avail the conversion shall be 1% plus applicable taxes of the principal outstanding or ₹5,000 plus applicable taxes, whichever is lower.

FAQ ON MORATORIUM 2.0.0.

What has RBI announced as a part of moratorium 2.0?

In the statement issued on 22nd May 2020, the RBI governor has extended the availability of moratorium by another 3 months. While the COVID package announce in March 2020 had allowed a moratorium on repayment of term loans for the period from March 2020 to May 2020, the policy statement of 22nd May has extended this for repayments due from June 2020 to August 2020. The RBI Statement says :

“In view of the extension of lockdown and continuing disruptions on account of COVID-19, the above measures are being extended by another three months from June 1,2020 till August 31,2020 taking the total period of applicability of the measures to six months (i.e from March 1,2020 to August 31,2020) ……….”

What is the material impact of the extension of moratorium?

All loan customers can now avail the moratorium on EMIs payable till August 2020. If customer chooses, he will not be required to pay the EMIs of June, July, August 2020. The repayment will re-start from September 2020 onwards :

  • Those customers who had availed of moratorium during Moratorium 1.0  and not paid the EMIs of March and/or April and/or May, may choose to extend the moratorium and not pay the EMIs of June, July, August 2020 ;
  • Those customers who did not avail the Moratorium 1.0 till 20th May 2020 can avail fresh moratorium, whereby they will not pay EMIs of June, July and August 2020 ;

Please note that like in Moratorium 1.0, the extension of moratorium does not mean “EMI Waiver” as the interest will continue to accrue on the unpaid principal. The accrued interest will be added to the principal outstanding and revised EMI will be payable on the increased principal from September 2020.

What is the impact of moratorium on the terms of the loan?

The impact on terms of the loan is explained below:

  • The Interest for the period of moratorium will be added to the Principal ;
  • The balance tenor of the loan will increase by the period of moratorium availed. Customers who had availed of 3 month moratorium earlier and now extend it by another 3 months, the balance tenor will get extended by 6 months.  Customers who take the moratorium now – the morat will be for 3 months and tenor will also get extended by 3 months ;
  • New EMI will be calculated on the increased POS (point (a) above) and balance tenor (point (b) above).  The New EMI will be payable from September 2020 onwards ;

Please explain the effect of moratorium extension with help of an example.

Case 1:  Customer A availed of moratorium in the month of March 2020 for 3 months. He is now availing an extension of the moratorium by another 3 months

As is visible, the EMI of the loan which had increased from Rs 43227 to Rs 44234 (3 month moratorium),  will now increase to Rs 45,265 (6 month moratorium).

The EMI is calculated basis balance tenor = 175 months after the expiry of morat period (Sept 2020 onwards).

Case 2:  Customer who will avail for moratorium afresh

Here, the new EMI will be Rs 44,233/- which is calculated on balance tenor of 172 months from September 2020 onwards.

I (Customer A) have already availed of the moratorium of repayments in the month of April 2020. Will this extension of moratorium be granted to me automatically?

No, Customers who have availed of a moratorium will have to give an explicit request for extension of moratorium.  SMS and Emails will be broadcasted to the customers. Two channels will be available to the customers :

  • A web page available on the website where customer can record his request ;
  • Missed call at 8743950000 from his registered mobile number ;
  • Customers may also write to customercare@pnbhousing.com from their registered email id ;

I (customer B) did not avail of moratorium earlier. Can I do it now?

Yes, moratorium can be availed afresh. SMS and emails will be sent across to customers. The three channels as mentioned in the answer of question above will be available to the customers for taking moratorium afresh.

Will subsequent disbursements be allowed during the extended moratorium period?

Yes, Subsequent disbursements will be allowed.

Can I cancel the moratorium once availed?

No, cancellation of moratorium is not possible.

Will Part payment be allowed during moratorium period?

Yes, Unlike Moratorium 1.0 part payment will be allowed.

What happens if I have already paid the June instalment?

In that case the applicable moratorium period will be for the remaining 2 months and June EMI amount will kept as an advance EMI, the effect of which, will be given against September’20 month instalment.

If I have multiple loans, do I have to apply for each one separately?

Yes, you will have to select the moratorium option for each account separately.

Which all loans shall be eligible for the relaxation?

All term loans outstanding as on March 1, 2020 were eligible to claim the relaxation. This includes both the housing and non-housing loans.

Can the borrower pay in between the moratorium period?

It is a relief granted to the borrower due to disruption caused by the sudden lockdown. However, the option lies with the borrower to either repay the loan during this moratorium as per the actual due dates or avail the benefit of the moratorium. It cannot be both.

When and how can the customer apply for moratorium?

The last date to apply for moratorium is 31st May’20, in order to avoid EMI deduction of June’20 month.

FAQ ON MORATORIUM 1.0.2.

What is the recent regulation released by RBI that concerns the home loan customer?

As per recent statement issued by RBI through press release dated 27th March, 2020, various developmental and regulatory policies have been announced that directly address the stress in financial conditions caused by COVID – 19.

All commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, all-India Financial Institutions, and NBFCs (including housing finance companies and micro-finance institutions) (“lending institutions”) are being permitted to allow a moratorium of three months on payment of instalments in respect of all term loans outstanding as on March 1, 2020. Accordingly, the repayment schedule and subsequent due dates, as also the tenor for such loans, may be shifted across the board by three months.

What is the meaning of moratorium?

Moratorium means a payment holiday. This means that during the period of moratorium no payment has to be made by the customer to the lending institution (PNBHFL). The interest which is accrued for the moratorium period shall become payable after the end of moratorium period. Thus this is like a deferment of payment.

Will opting for moratorium give relaxation of free EMI period?

The idea of a moratorium is not to give you an interest free period but instead it is to help with cash flow.

Is this a waiver of EMIs or a deferment of EMIs?*

This is not a waiver, but a deferment. Customer will have to pay the EMIs at a later as decided by the HFC / bank. The RBI has told financial institutions to have board-approved policies in place on moratorium/deferment.

Does the moratorium cover both Principal and Interest?*

Yes. It does. If announced by bank / financial institution, you can forego payment of your entire EMI, including payment and interest.

Has the RBI granted a compulsory moratorium? Will PNBHFL grant moratorium to all loan customers by default?

No, the lending institutions have been permitted to allow a moratorium of three months. This is a relaxation offered by RBI to the lending institutions. This is neither an RBI guidance to the lenders, nor is it a leeway granted by the RBI to the borrowers to delay or defer the repayment of the loans.

Customers wanting to avail moratorium offer will need to specifically request / apply for the same. For ease of customers, the methodology has been made simple.

What shall be the moratorium period?

PNBHL has given full 3 months tenure as a moratorium period.

From what date can the moratorium be granted?

The lenders are permitted to grant a moratorium of three months on payment of all instalments falling due between March 1, 2020 and May 31, 2020. The intention is to shift the repayment dates by three months. Therefore, the moratorium should start from the due date, falling immediately after 1st March, 2020, against which the payment has not been made by the borrower.

For example, if an instalment was due on 15th March, 2020, but has remained unpaid so far, the lender can impose the moratorium from 15th March, 2020 and in that case, revised due date shall be 15th June, 2020.

PLEASE NOTE : The last date to apply for moratorium is 20th May’20 hence we will not be able to accept requests any further.

Will the interest accrue during the moratorium period?

Yes, the moratorium is a “payment holiday” however, the interest will definitely accrue. The accrual will not stop.

How will be the treatment of interest in the loan account?

Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period.

Please elaborate the aforementioned regulation and its impact on a customer’s loan account, with the help of an example?

Please refer the below mentioned illustration to understand it better.

You have a home loan of Rs. 50 lakh at 8.5% interest for 10 years. The EMI is Rs. 62,000 (approximately).

You have to pay the first instalment in April, but you choose to take the moratorium. This means the principal of Rs. 50 lakh attracts interest at 8.5%/12 = Rs. 35,000. So your loan amount at the end of April is Rs. 50,35,000.

You don’t pay in May. Interest applies on the FULL amount of 50.35 lakh now, so it’s a little closer to Rs. 36,000 in May. The total outstanding becomes Rs. 50.71 lakh. After three months, your new principal is Rs. 51.07 lakh.

Effectively you’ll have about Rs. 1 lakh in extra interest to be paid to the bank.

The loan stretches three more months at the end, but this Rs. 1.07 lakh extra is additional so either you have to increase the EMI, or request for reduction in ROI.

It is therefore advisable to restrict the selection of moratorium option only in the scenario of cash flow issues.

In case a customer opts to go for moratorium offer, then will it have any adverse impact on CIBIL score?

As per the released regulation, the rescheduling of payments will not qualify as a default for the purposes of supervisory reporting and reporting to credit information companies (CICs) by the lending institutions. CICs shall ensure that the actions taken by lending institutions pursuant to the above announcements do not adversely affect the credit history of the beneficiaries.

Is it possible to apply for home loan as well opt for moratorium, at the same time?

No, Moratorium is applicable for loans that existed as on March 1st, 2020.

Is the moratorium on principal or interest or both?

The repayment schedule and all subsequent due dates, as also the tenor for loans may be shifted by three months (or the period of moratorium granted by the lending institution).

Instalments will include payments falling due from March 1, 2020 to May 31, 2020 in the form of :

  • Principal and/or interest components;
  • Bullet Repayments;
  • Equated Monthly instalments;

Will there be delayed payment charges for the missing instalments during the moratorium period?

Overdue interest will be applicable in case of default in payment. However, during the moratorium, the payment itself is contractually stopped. If there is no payment due, there is no question of a default. Therefore, there will be no overdue interest or delayed payment charges to be levied.

Which all loans shall be eligible for the relaxation?

All term loans outstanding and accounts as on March 1, 2020 were eligible to claim the relaxation. This includes both the housing and non housing loans.

Is the lending institution required to grant the moratorium to all categories of borrowers?

Since the grant of the moratorium is completely discretionary, the lending institution may grant different moratoriums to different classes of borrowers based on the degree of disruption on a particular category of borrowers. However, the grant of the moratorium to different classes of borrowers should be making an intelligible distinction, and should not be discriminatory.

Can the borrower pay in between the moratorium period?

It is a relief granted to the borrower due to disruption caused by the sudden lockdown. However, the option lies with the borrower to either repay the loan during this moratorium as per the actual due dates or avail the benefit of the moratorium. It cannot be both.

What will be the treatment in case of a customer with multiple loan accounts?

If the customer has applied for moratorium, the same has been made applicable to all linked loans of the customer.

When and how can the customer apply for moratorium?

The last date to apply for moratorium is 20th May’20 hence we will not be able to accept requests any further.

FAQs on Waiver of interest on interest V1.2.0

What is the “Waiver of interest on interest” scheme approved by RBI?

It has been decided by the Government of India to waive “interest on interest” charged on consumer loans for the period 1st March 2020 to 31st August 2020. This will give a big relief to retail and MSME borrowers. A scheme for grant of ex-gratia payment of the difference between compound interest and simple interest for six months of loans up to Rs 2 crore has been rolled out by Department of Financial Services through its notification dated 23rd October 2020

Borrowers who availed the moratorium will be compensated for the compound interest they would be charged by the banks while those who paid on time will get as cashback the notional interest on the interest that they paid.

Who is eligible for under this scheme?

a) Borrowers who have loan accounts having sanctioned limits and outstanding amount of not exceeding Rs 2 crore (aggregate of all facilities with lending institutions) as on February 29 shall be eligible for the scheme

b) Housing loan, education loans, credit card dues, auto loans, MSME loans, consumer durable loans and consumption loans are covered under the scheme

c) The loan account should be standard account as on February 29, 2020. By Standard Asset, it means that the loan should be less than 90DPD as on 29/02/2020

d) The payment will be made to the borrower’s loan account irrespective of whether the borrower has fully availed, partially availed or not availed the moratorium. Thus, even if you have not opted for the moratorium, then also you are eligible under the scheme.

The basic eligibility criteria is that total loan outstanding of the customer (all lenders) should be less than 2 crores. How will the total outstanding be arrived at?

The loan outstanding will be arrived at by checking the Bureau data i.e CIBIL data. If the CIBIL score shows total outstanding > 2 crores then benefit of ex gratia will not be available.

How will interest on interest waiver scheme work?

As per the scheme, the lending institutions shall credit the difference between compound interest and simple interest with regard to the eligible borrowers in respective accounts for the said period irrespective of whether the borrower fully or partially availed the moratorium on repayment of loan announced by the RBI on March 27, 2020.

Under the scheme, the difference between the compound interest and simple interest will be credited to the borrower’s loan account for the period between March 1, 2020 and August 31, 2020 (Six months/ 184 days).

How is the interest amount calculated?

If you have opted for the six-month moratorium, then the interest portion of your EMI will be added to the outstanding principal component and the new EMI is calculated for the remaining loan tenure. Normally, the interest is calculated using a compounding formula, which means you pay interest on accrued interest as well. However, under the waiver scheme, a borrower is required to pay simple interest instead of compound interest on the outstanding loan amount during the moratorium period which means a lower interest burden on the borrower. The difference between the simple interest (which is offered under the scheme) and compound interest (a normal banking practice) will be borne by the government irrespective of whether the borrower has availed moratorium or not. This essentially also benefits the borrower who were able to service their EMIs diligently even during the moratorium period.

Example:

Suppose the Loan outstanding as on 29/02/2020 : Rs 50,00,000
Rate : 9% p.a

Simple interest for 1 month : 50,00,000 x 9% / 12 = Rs 37,500
Simple interest for 6 months : 37,500 x 6 = Rs 2,25,000

Compound interest for 6 month :{5000000 x (1 + (9%/12)) ^ 6} – 5000000
= Rs 2,29,262

Difference (B-C) = Rs 2,29,262 – Rs 2,25,000
= Rs 4,262

What is the Principal on which the interest benefit is to be calculated? What if I have made a part payment in the intervening period? What if I have taken a subsequent disbursement?

The guidelines from government of India have made the scheme very simple. The amount on which the ex gratia benefit will be calculated is the principal outstanding as on 29th February 2020. Any part payment / subsequent disbursement done in the account post 29th Feb 2020 will not be considered in the base amount used for calculations.

Am I eligible, if my loan is closed (after Feb 2020)?

Those who have foreclosed/ preclosed/closed their loan dues during the moratorium between March and August 2020 will also be eligible for the benefit. The period for which the interest benefit will be calculated will be restricted to time between 01st March 2020 till the date of closure of loan.

Am I eligible, if I did not avail moratorium?

Yes, the scheme is also applicable for those customers who have not availed the moratorium scheme and continued with the repayment of loans.

What will be the rate of interest on which the benefit will be given?

The interest rate on which the computation (differential between Simple interest and compound interest) would be worked out (as shown in example in answer to Question no 4) will be the rate which was prevailing as on February 29, 2020.

When will the amount be credited?

The amount will be credited to the borrower’s loan account by November 5, 2020. In case the loan account is closed, the amount will be credited to the borrower’s savings bank account by November 05, 2020.

What will be the mode of credit of the ex gratia (interest on interest) payment?

For the Live loan accounts, the ex gratia payment will be credited as a prepayment into the loan account of the customer.

For the loans which have been closed, the payment will be credited as NEFT/Cheque into the repayment bank account of the customer

What will be the impact of this payment on the EMI of the loan?

The EMI of the loan will remain unchanged to the existing (Post August 2020) EMI. The credit of ex gratia payment to the loan account will lead to reduction in balance tenor.

Will the ex gratia payment be available to loans restructured under the COVID resolution plan?

Yes, the benefit will be credited to the restructured loans also.

What will happen for the loans booked under SUBVENTION SCHEME?

If the loan is running under the upfront subvention scheme, the ex gratia payment will be credited as excess in the customer account. The same will be adjusted against the future dues/ outstanding of the loan.

What will be the grievance redressal mechanism?

The normal grievance redressal mechanism of the company will be used for handling the grievances related to ex gratia interest on interest payments.  Customers may approach the branch or write to customercare@pnbhousing.com. Any further escalations may be sent to nodalofficer@pnbhousing.com . Level 3 may go to executivedirector@pnbhousing.com

Customer may also logon to the website to put in his escalation. A separate escalation category ‘waiver of interest on interest is being created.

What will happen if the loan has become delinquent after 29th February 2020? Will the ex gratia payment be applied to the overdues?

The ex gratia payment is a payment to the customer and the dues are also customer’s responsibility. Hence ex gratia payment will be applied to the loan as a part payment. As per logic of the payment appropriation, the dues will be adjusted before crediting the funds to the principle outstanding

Will the GECL loans given to the MSME customer be considered while calculating the loan eligibility?

No, the eligibility of the customer is calculated basis the loan outstanding as on 29th February 2020. As the GECL loan is disbursed after that period, it will not be added to the loan outstanding. The base loan of the customer (who has taken GECL) will be eligible for ex gratia payment, if the loan was there as on 29th February 2020.

Do I have to apply for the relief?

No. The ex gratia relief will be credited to the account of all eligible borrowers without
any requirement to apply.

How will PNB Housing assess whether a borrower has aggregate loan facilities upto Rs.2.00 cr from the banking system?

Lending institutions are to assess this on the basis of information available with them
as well as information accessible from credit bureaus.

Frequently Asked Questions :: Home Loans Asset

What is the process of applying for a Home Loan?

Step 1: Submit your loan application along with required set of documents.

Step 2: Your application would be assessed on the basis of various eligibility and funding norms.

Step 3: A property valuation and title check may be carried out by the company representative to determine the property value and legal clearance of the property to arrive at the loan amount.

Step 4: Based on the internal and regulatory guidelines, PNB Housing may approve or reject the loan application.

Step 5: Submission of the original property documents are required along with signing of agreements, handing over of registered property papers and submission of post-dated cheques/ECS.

Step 6: Upon finding all the documents in order, PNB Housing will disburse the loan amount to the developer/contractor based on the progress of construction. The EMI/Pre-EMI will commence after the disbursement.

Am I eligible for a Home Loan?

You are eligible for a loan if you are an Indian citizen or a person of Indian Origin and are a salaried/ self- employed professional/ a businessman. Your loan eligibility will be determined by PNB HFL on the basis of professional income, age, qualifications, number of dependents, co-applicant’s income, assets, liabilities, stability and continuity of occupation, savings and prior credit history. Further, the loan eligibility will also be dependent on the value of property selected by you.

What percentage of property value can be funded?

We can fund up to 90% of the property value in case of Home Loan and up to 60% in case of Loan Against Property. However, PNB HFL funding norms may change from time to time and from property to property or based on the loan amount.

I purchased a property 3 months back; can i get a Home Loan?

Yes, you can avail re-finance at applicable Home Loan rate within 6 months from the date of property purchase.

What is EMI and Pre-EMI?

Your loan is repaid through Equated Monthly Instalments (EMI), which includes principal and interest component. EMI repayment starts from the month subsequent to the month of final disbursement. Pre-EMI Interest is the simple interest, payable every month till the time loan amount is not fully disbursed.

In case of change of floating rate of interest, will my EMI change or tenure?

Keeping the borrower’s convenience in consideration, EMI is kept constant and residual loan tenure is adjusted. Under exceptional situations, the EMI is changed to support the principal repayment, within a time frame.

What security do I need to provide?

The prime security for the loan is by way of deposit of title deeds and/or such other collateral security as may be decided by PNB HFL. The title of the property should be clear, marketable and free from any encumbrances.

Can I prepay my Home Loan? Are there any charges applicable?

Yes, home loan can be prepaid. Part payment is to be made vide a cheque at any of your nearest PNB Housing branches. The cheque should be in favour of “PNB Housing Finance Limited ”, from any of the loan applicants bank account only. Part prepayments are to be made between 25th – 1st – 24th of the month. For applicable loan pre-payment fee, kindly refer to the Schedule of Charges under “Fair Practice Code” section on our website www.pnbhousing.com

What does fixed rate of interest mean?

PNB Housing offers a pure fixed rate of interest from the day of first disbursement for a specified period as per the extant loan scheme, prevailing at the time of availing the loan. Thereafter, for the residual loan tenure, the outstanding principal loan amount automatically moves to a floating rate of interest at the then prevailing rates of interest.

When can the customer avail of the disbursement of his home loan?

Customer’s loan will be disbursed after he has selected the property, applied for his Home Loan, submitted the requisite income and property documents, the property is technically and legally sound and customer has paid his own Contribution towards the purchase of the property. The disbursement would be in Indian Rupees and made at the PNB Housing branch in India, as specified by him.

The cheque for the loan amount is drawn in favour of the Developer or the Seller (in case of a resale property) as the case may be. In case of an under-construction project, PNB Housing disburses the loan amounts proportionate to the stage of construction.

How do I get my Income Tax certificate?

Income Tax certificates can be availed from:

1. Our IVR Services by calling at 1800 120 8800
2. Our Mobile Application
3. Our website https://customerservice.pnbhousing.com/myportal/pnbhfllogin

How do I replenish exhausted PDCs?

1. Kindly submit the Post Dated Cheques to your nearest PNB HFL branch before the EMI due date to avoid any late payment charges.
2. Repayment of loan is preferred through ECS.

Does the property need to be insured?

Property insurance is mandatory in order to protect your property against uncertainties like earthquake, fire or any damage and destruction due to natural and man-made calamities, during the tenure of the loan.

When can the customer avail of the subsequent disbursements of his home loan?

Customers can login to the mobile application and apply for the subsequent tranches for their home loan from anywhere anytime.

Frequently Asked Questions :: Home Loan Asset – NRI

What is the definition of a NRI?

NRI definitions under FEMA:

The most relevant definition concerning an NRIs various bank accounts and investments in movable and immovable properties in India is the one provided under FEMA, which has replaced the Foreign Exchange Regulation Act , 1973-(FERA) with effect from 1st June,2000. Person Residing outside India is the term used for an NRI, being a person who has gone out of India or who stays outside India for the purpose of employment or carrying on business or vocation outside India or any other circumstances which indicate his intention to stay outside India for an uncertain period.

How can customer repay the loan?

PNB Housing offers various modes for repayment of the loan. Customer may either issue post-dated cheques or standing instructions to his banker to pay the instalments through ECS (Electronic Clearing System) from your Non-Resident (External) Account / Non-Resident (Ordinary) Account in India. Cash payments will not be accepted.

How is my loan reassessed if there is a change in status from Non-Resident Indian to Resident Indian?

In the event of customer getting re-located back to India, PNB Housing reassesses the repayment capacity of the applicant(s) based on Resident status and a revised repayment schedule is worked out. The new rate of interest will be as per the prevailing applicable rate of Resident Indian loans (for that specific loan product). This revised rate of interest would be applicable on the outstanding balance being converted. A letter is given to the customer confirming the change of status.

Is the Customer required to be physically present in India at the time of availing loan?

Customer need not be present in India to avail of your Home Loan. In case customer is posted abroad at the time of submission of the loan application and disbursement of the loan, he/she can avail the loan by appointing a Power of Attorney as per PNB Housing’s format. The Power of Attorney holder can apply and carry out the formalities on his behalf.

What is a Power of Attorney?

A power of attorney is a resident Indian appointed to act on behalf of all the applicants through an execution of the Specific Power of Attorney (SPOA) deed. It is mandatory for both the applicant and co-applicant execute the SPOA in favour of the person concerned. If the co-applicant is a resident Indian, he / she can also be the SPOA through the execution of the SPOA by the applicant.

Frequently Asked Questions :: Fixed Deposits

Who can open a FD account with PNB Housing?

Fixed Deposit will be accepted from Resident Individual/ HUFs /Public/Private companies /Non-Resident Indians/ Co-operative Societies / Co-operative Banks/ Trust / Association of person, PF Trust etc.

How is a deposit made?

A prospective depositor has to fill prescribed “Deposit Application Form” along with all KYC documents and an accounts payee cheque/ Demand Draft/ NEFT/ RTGS in favour of PNB Housing Finance Limited. Deposit applications are available at all PNB Housing branches and with its authorized brokers. Deposit forms could be downloaded from company’s website – www.pnbhousing.com.

Does the property need to be insured?

Property insurance is mandatory in order to protect your property against uncertainties like earthquake, fire or any damage and destruction due to natural and man-made calamities, during the tenure of the loan.

What is the minimum amount to place a FD with PNB Housing?

Cumulative Deposit – INR 20000
Non-Cumulative Deposit
Monthly Income Plan – INR 100000
Quarterly Income Plan – INR 50000
Half yearly Income Plan– INR 20000
Annual Income Plan – INR 20000

What is the range of tenure for which a customer can have a FD account?

If a customer is a resident Indian individual/entity/trust the minimum tenure is 1 year and maximum tenure is 10 years.

Will a customer get any receipt of deposit with PNB Housing?

Yes, PNB Housing will issue FD receipt of the money deposited by a customer with us.

Are Know Your Customer (KYC) documents required for all depositors?

Yes.

Checklist of Know your Customer (KYC) Compliance?

In terms of the Prevention of Money Laundering Act, 2002, the rules notified there under and KYC guidelines issued by the National Housing Bank (NHB), every depositor is required to comply with the KYC requirements by submitting the following document:

  • Latest photograph.
  • Certified copy of proof of identity such as Pancard, Aadhar Card, Passport etc.
  • Certified copy of proof of address, for Corporate it is certificate of incorporation, Pancard Registration no. / trust deed.

Can a loan be obtained from PNB HFL against the security of a PNB HFL Fixed Deposit?

Yes, loan facility is available at the discretion of PNB Housing, which can be availed only after three months from the date of deposits and up to 75% of the deposit amount subject to certain terms and conditions. Interest rate on such loans will be 2% higher than the rate of interest on the deposit being paid to depositor.

Can a deposit customer redeem his FD amount before the contracted term? If so, are there any conditions applicable to the same?

Yes, FD amount can be withdrawn before the original term (pre-mature withdrawal) of the FD. In accordance with the provisions of the Housing Finance Companies (NHB) Directions 2010, and on request being made by a depositor, premature withdrawal of the deposit may be allowed subject to the following conditions:

Period completed from date of deposit Individuals Non – Individuals
(a) Minimum lock in period 3 Months 3 Months
(b) After three months but before six months 4% p.a. No Interest
(c) After six months but before the date of Maturity For Individuals and Non – Individuals the interest payable shall be 1% percent lower than the interest rate applicable to a public deposit for the period for which the deposit has run.

In case a deposit is made through an authorized deposit broker – the excess brokerage paid will be recovered from the deposit amount. Excess brokerage is the difference between brokerage for original contract period minus brokerage for the period for which deposit has run.

When does a customer become liable for TDS?

If the aggregate interest income a customer is likely to earn for all deposits is greater than Rs.5,000/- in a financial year, depositor becomes liable for TDS. A customer can submit Form 15G (For Individuals and HUF) /15H (For Senior Citizen who is of the age of 60 years or more) or a certificate for lower/nil deduction of TDS issued by Income Tax Authorities u/s 197 of the Income Tax Act, 1961.

In case of NRIs, any amount of interest paid/credited during the financial year shall attract TDS.

Can Non Resident Individuals open Fixed Deposit A/C?

Yes, Non Resident Individuals can open a fixed deposit with PNB Housing and provide funds from their NRO accounts only. Minimum tenure is 1 year and maximum tenure is 3 years.

Can a depositor open multiple accounts?

Yes, but for the purpose of computation of tax liability all the accounts will be clubbed.

Can a Trust deposit money with PNB Housing?

Yes, Deposit with PNB HFL are eligible investments under Sec 11(5) (vii) and 11 (5) (ix) of the Income Tax Act, 1961.

Is a Trust liable for TDS on interest earned?

Yes, unless a trust produces a certificate of exemption issued by a competent authority.

Is nomination facility available?

Yes, nomination facility is available with PNB Housing FD.

Can a deposit be accepted from minor?

Yes, a minor can apply under a guardian.

Is it mandatory to give fresh application form on renewal?

Yes, as per the directions of National Housing Bank, depositor has to provide a duly discharged deposit receipt along with an application form at the time of renewal.

How can change in demographic details of an individual be informed?

Change in demographic details can be informed to PNB Housing branch office through an e-mail from the registered e-mail id or placing a request on the Company’s website, under Customer Care>Write to Us section.

What is the procedure for re issue of lost/mutilated deposit receipt?

In case a deposit receipt is lost/ mutilated a depositor has to give an application and an indemnity form for issue of duplicate deposit receipt.

What is the procedure for payment of deposit proceeds in case of death of a depositor?

  • In case of death of depositor, the proceeds will be paid to joint holder, if the repayment option is either or survivor.
  • In other cases, the legal heir(s) have to produce either a succession certificate/ probate of a will and an indemnity bond (in a prescribed format). Claim will be settled by PNB Housing, if the Company is otherwise satisfied.

Are Company’s deposit rated?

Yes, Company’s deposit programme has been rated by CRISIL. The rating is FAAA which is the highest rating.

At what frequency will a deposit customer receive interest on PNB HFL FD?

Interest will be payable on the fixed deposit from the date of realisation of cheque or fund transfer to PNB HFL’s bank account. Interest on deposit is paid as per the FD plan selected by a customer.
Non-Cumulative Deposit:

Scheme Interest Payment Date
Monthly Income Plan Last day of each month
Quarterly Income Plan June 30, September 30, December 31st and March 31st
Half Yearly Plan September 30th and March 31st
Annual March 31st

Cumulative Deposit: Interest will be compounded annually on 31st March of every year after deducting the tax, wherever applicable. The principal along with interest will be paid on maturity once the discharged deposit receipt is received by us.

Frequently Asked Questions :: Loan Against Deposits

What is Loan against Fixed Deposit?

Loan against Fixed Deposit is a loan, wherein you can pledge your FD as a collateral, in return for
the loan amount. PNB Housing offers easy Loan against Fixed Deposits at fixed interest rates, with quick
processing, flexible repayment options and minimal documentation.

Loans may be granted against public deposits upto 75% of the principal deposit amount carrying @2% per
annum above the deposit interest rate and other additional charges applicable on such deposit, provided
the deposit has run for a minimum period of 3 months.

On maturity, the outstanding loan together with interest shall be settled in one lump sum by the depositor
or shall be adjusted on maturity of the deposit.

What is the rate of interest on Loan against Fixed Deposit?

The rate of interest applicable on Loan against Fixed Deposit is 2% more than the effective FD rate
of interest.

What percentage of property value can be funded?

We can fund up to 90% of the property value in case of Home Loan and up to 60% in case of Loan Against Property. However, PNB HFL funding norms may change from time to time and from property to property or based on the loan amount.

What all documents are required if I have to apply for Loan against Fixed Deposit?

Option 1. Normal process

You require the following set of documents:

a. Application form
b. Original signed and revenue stamped FDR

Option 2. COVID 19 Scenario

Amidst the COVID 19 lockdown phase, the following process needs to be followed for the
application of the Loan against Fixed Deposit:

For raising a fresh LAD request, the customer needs to email the scanned copies of following
set of documents at deposit@pnbhousing.com.

  1. Hand written & signed LAD form – The contents of LAD form (given below) has to be handwritten and signed by the customer.
  2. Click here for Loan against Deposit application form
    https://www.pnbhousing.com/downloads/.
  3. Those customers who can assess a printer easily can take a print of the Application Form
    (instead of writing) duly signed by all the applicants.
  4. The customer needs to add the following sentence at the bottom of the cited hand written application: – “I undertake to submit the original signed documents i.e. FDR and Loan against Deposit application form within 5 days after this lockdown is revoked”.
  5. The signed and revenue stamped FDR.

Is my CIBIL score checked as a part of processing of loan?

No, the CIBIL score is not checked the loan is given on the basis of existing Fixed Deposit

Is there any processing fee applicable for Loan against Fixed Deposit?

There is no processing fee applicable for a case of Loan against FD.

Are there any foreclosure or pre-payment charges?

No, there are no foreclosure or pre-payment charges applicable on your Loan against Fixed
Deposit.

What is the maximum loan amount that can be availed?

You can avail loan amount up to 75% of the fixed deposit amount.

Who all are eligible to avail Loan against FD?

Below mentioned are eligible to avail loan against Fixed Deposit :

  • Resident citizens of India
  • Hindu Undivided Family (HUF)
  • Sole Proprietorships, Partnership Firms,
  • Associations
  • Trusts

What is the eligibility for applying Loan against FD request?

You can take Loan against FD after completion of 90 days from the effective date of deposit.

When can I repay the Loan against FD?

The loan amount can be re-paid either in part or in full at any time before the date of maturity of
deposit.

What is the processing time for a loan against FD request?

It takes T + 1 working day to process, the loan after the application and FDR is submitted / e
mailed.

In case I have made a part payment for loan and some part of the loan is still unpaid, then how
the closure of loan process be done at the time of maturity of deposit?

In such a scenario, the entire due loan amount will be recovered either by the way of interest or
principal or TDS will be recovered from the deposit amount payable at maturity.

Will pre-mature of deposit be allowed, if I have taken loan against deposit?

Yes, It can be pre-closed.

What is the process to pre-close the loan against deposit?

Basis the request letter duly signed by all applicants, pre-closure of loan against deposit request can be accepted and processed ONLY BY BASE BRANCH.

Upon submission of request, the loan portion will be settled first from the deposit amount (subject to TDS). Applicant will have the option to either adjust the loan closure amount either from his deposit maturity amount or settle from his own sources. In case, applicant opts to pay the loan closure amount from his deposit maturity amount (after deduction of the pre-closure charges etc), balance deposit maturity will be credited in the customer’s bank account.

Please note that a lien will be marked against all loan against deposit cases and it will be revoked, once the loan amount is duly settled off.

What is the process to change bank account details of Loan against Deposit?

In order to change bank account details, you need to give us the cancelled cheque copy of that
account. The loan amount can only be credited to the first applicant’s bank account and not to any third
party.

In case I have made a part payment for loan and some part of the loan is still unpaid, then how
the closure of loan process be done at the time of maturity of deposit

In such a scenario, the entire due loan amount will be recovered either by the way of interest or
principal or TDS will be recovered from the deposit amount payable at maturity.

Will I be getting any acknowledgement / communication against my LAD?

Yes, SMS communication will be auto-triggered from the system.

Can the LAD be taken against Minor’s deposit?

No, Loan against deposit cannot be opted in cases where Minor is the first applicant

Do all the applicants need to sign in the promissory note for LAD?

Yes, all the applicants have to place their signatures in the promissory note, which is part of the
Application Form.

How will be the treatment of loan closure in case of Auto Renewal?

The unpaid loan amount from the deposit amount (subject to TDS) will have to be set off by the
customer and the auto-renewal functionality will not be processed, in case the loan is not paid till the date
of maturity of deposit.

The balance deposit (deposit amount minus loan amount) amount will remain with PNB Housing Finance
till the customer place the request of closure of deposit / renewal of deposit.

When will the interest be paid in case of Non-Cumulative Deposit, if LAD has been availed?

In case of non-cumulative deposit, the interest payment will not be processed till the closure of
loan.

When will the interest on loan be due?

Interest on loan will be compounded monthly, quarterly, half-yearly, yearly depending upon the
interest payment/compounding frequency on Deposits. The interest on loan will be recovered/paid from
the interest on deposit (subject to TDS if any) and/or maturity value of the deposit.

Frequently Asked Questions :: Customer Portal & Mobile Application

How can I access my account details online?

Deposits and Loan account details are available online on Customer Portal and on Mobile Application. The web version can be accessed through the website by clicking “Customer Login” and mobile application can be downloaded from Google Play store (for Android) and App Store (for iOS). Users can create their user id and password to enjoy hassle free online services. It is a single window interface to provide important information at a click of a button, like IT Certificates, EMI payment status etc.”

Link Customer login to https://customerservice.pnbhousing.com/myportal/pnbhfllogin

What all services can a home loan customer avail from the Mobile Application?

Customers can anytime anywhere access the following:

1. Download Statement of account
2. Download IT Certificates
3. View Transaction history
4. Update email address
5. Raise & Track Service Requests
6. Apply for subsequent disbursements

What all services can a deposit customer avail from the Mobile Application?

Customers can anytime anywhere access the following:

1. Download Statement of account
2. Download Interest Certificates
3. Submit Form 15G/H online
4. Update email address
5. Raise & Track Service Requests

Frequently Asked Questions :: Pradhan Mantri Awas Yojna (PMAY)

Who Can Avail Subsidy Under Credit Linked Subsidy Scheme (CLSS) under Pradhan Matri Awas Yojna (PMAY)?

  • A beneficiary family not owning a house in any part of the India is eligible for this subsidy subject to income criteria as defined for the family under various schemes for EWS/LIG/MIG-1 and MIG-2.
  • Through this scheme, the beneficiary is eligible to avail interest subsidy on the purchase/construction of a house/enhancement of a dwelling unit.
  • For more details please refer to the section on PMAY.

How can a customer track his PMAY Application online?

Customers may track the status of their PMAY application through the link https://pmayuclap.gov.in/ by using their Application id.

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