Relief to vehicle owners, hypothecation removal now to be online | India News
NEW DELHI: In a major relief, removal of hypothecation from vehicles will now happen automatically through an online system once the loan is fully repaid, saving people the hassle of multiple visits to transport offices and reaching the bank. The Road Transport Ministry has launched this new system from March 1 (Monday), initially with one nationalized bank and five non-banking financial companies (NBFCs). More will be added soon.The move is aimed at eliminating procedural delays, and difficulties faced by borrowers in updating their vehicle records after paying off their loans and going to regional transport offices to initiate removal of hypothecation from vehicle registration certificates. The process often involves multiple inspections and significant paperwork.Officials said the system works using RBI’s Unified Lending Interface (ULI), which enables secure and real-time data exchange between lenders and government platforms. “The online interface interacts between the bank, ULI and Vahan system. So, the entire process including verification takes place without any human intervention. Once the process is complete, the owner gets an SMS from Vahan informing him/her about the removal of hypothecation. This is part of the government’s initiative to improve the convenience of living,” said an official.Separately, after the vehicle owner repays the loan, the bank will send a ‘No Objection Certificate (NOC)’ to the owner.At present five NBFCs including SBI and Cholamandalam, Sriram Finance and Sundaram Finance have started implementing this system. Officials said more banks and financial institutions will be onboarded into the system in phases to ensure wide coverage and seamless implementation across the country. They added that the initiative will significantly reduce processing time and improve transparency.Welcoming the initiative, transport services expert Anil Chikara said, while banks and financing institutions take care of all the hypothecation issues when taking a loan to buy a car, these institutions do not help the customers in the process while repaying the loan.
