What is an NOC and What are Its Benefits?
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What is an NOC and What are Its Benefits?

  • Highlights

  • An NOC is a legal document issued by financial institutions

  • It authenticates payment of all dues in case of loan closure

  • It is required for several loans including home and business loans

  • Submitting it to credit bureaus ensures a healthy credit score

An NOC or a no objection certificate is an essential legal document issued by an organization, agency or even by individuals stating no objection to the covenants mentioned in the certificate. This document serves many purposes including immigration, general litigation and even employment. Sometimes, it is also referred as a ‘No Dues Certificate’.

What is an NOC for loan closure?

In case of loans, it’s a document issued by the lender stating that the borrower has cleared all the dues. Once you have paid off your loan, it’s vital to collect the NOC from your lender. The NOC issued by your lender has:
- Your name
- Loan details
- Property address
- Date of loan closure

The NOC also acquits all rights of the lender over the collateral, if any, mortgaged for procuring a loan. Generally, banks, non-banking finance companies (NBFCs) and other financial institutions dispatch the NOC to your address. If you’ve changed your address during the loan serving tenor, ensure it’s updated in the records of your lender.

Advantages of an NOC

A no objection certificate gives you the much-needed peace of mind once the loan repayment process is over. The major advantages of this certificate are:
- It’s an authentic document which clears any discrepancies, should it arise in the future regarding loan repayment
- Submitting the NOC to credit bureaus, such as CIBIL, ensures a healthy credit score
- It prevents you from the legal hassles that may arise in case there is any confusion regarding loan settlement

Thus, this simple, yet essential legal document saves you from several possible hassles that may arise in the future regarding loan settlement.

Loans that require an NOC

A NOC is required for a myriad of loans. Some of them are:
- Home loan
- Car loan
- Business loan
- Personal loan
- Loan against property (LAP)
- Loan against shares (LAS)

How to receive your NOC?

Though most lenders dispatch the NOC to your registered address with them, you must take the onus of receiving the NOC on time.In order to get your NOC:
- Write to your lender asking for an NOC and return of all the original documents submitted, if any, before procuring the loan
- Many lenders might offer this facility online, where you need to log into your account and download the NOC

Note that in case of home loan taken for a registered property, you need to need to submit the NOC copy to the registrar of properties to get the lien of hypothecation removed. If you fail to do so, your lender continues to own the property.

What to do if you misplace your NOC?

If you misplace your NOC, lodge an FIR. Approach your lender with the FIR copy and documents related to loan requesting for a duplicate NOC. However, obtaining a duplicate NOC may take a little more time. Once you obtain the NOC make sure everything is correct, with the word ‘no objection’ finding a suitable mention.

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