Penal Interest on Home Loan and Overdue Charges

Penal charges on a home loan are additional charges that may apply when an EMI is not paid by its due date, and they are treated as penal charges, not as penal interest added to the interest rate. An overdue EMI stays payable, attracts penal charges as disclosed in your loan terms and is reported to credit bureaus, and a prolonged overdue can lead to recovery measures because the loan is secured against the property. Check your overdue amount in My Account, clear it if you can, and respond to any legal notice within the stated timeline.

• Penal charges and the situations they apply to are disclosed in your loan agreement and Key Facts Statement, so check them there instead of estimating from a general percentage.
• Penal charges are not added to the interest rate and are not capitalised.
• An overdue EMI is reported to credit bureaus, and a later payment does not remove the earlier entry.
• Pay the overdue amount through My Account or the app, using Make loan payments and then Missed instalments or Other overdues.
• A single missed EMI does not automatically put the property at risk, but prolonged non-payment can lead to recovery measures under the loan agreement and law.
• Read any legal notice, check it against your loan statement and respond within the stated timeline.

Penal charges are additional charges that may apply when a borrower does not meet the terms of a home loan agreement, such as failing to pay an EMI on time. Under RBI's directions on penal charges, such amounts are treated as penal charges, are not added to the applicable interest rate and are not capitalised. The charges, and the situations in which they apply, are disclosed in the loan agreement, the Key Facts Statement where applicable, and other loan documents. Check the amount for your account in these records instead of estimating it from a general percentage.

How do overdue home loan payments affect your account?

An overdue home loan EMI remains payable under the loan terms, and continued non-payment can add amounts payable under the loan agreement and affect your credit record. The table shows what can follow at each stage.

The consequences depend on your loan account, repayment history and terms. Do not assume that a particular charge or recovery action applies to every home loan.

How are penal charges on home loan overdue payments determined?

The penal charges for your loan depend on its terms and the lender's disclosed policy, and the loan agreement and related documents state the amount and the reasons for it. Check these records to see the amount that applies to your account:

• Loan agreement: The provisions on default, overdue payments and penal charges.
• Key Facts Statement: The disclosed charges and loan terms, where applicable.
• Loan statement: The overdue amount and other amounts shown in your account.
• Payment records: Your bank or payment records, to compare with the statement.

Do not use a general penal interest formula to estimate the amount payable, because penal charges are not levied as an additional rate of interest.

Check your loan account first so that you know the overdue amount and charges, then clear the amount if you can. Follow these steps:

1. Open My Account or the app and sign in using your registered mobile number and OTP.
2. Verify your details with your date of birth, where asked.
3. Go to Service and select your home loan under Your Relations.
4. Check the outstanding amount, overdue details and payment history, and download the loan statement.
5. Choose Make loan payments, then Missed instalments or Other overdues, and pay using UPI, net banking or a debit card.
6. Keep the payment confirmation, and check the loan account after the payment is processed.
7. If an amount does not match your payment records or loan documents, raise a request through Help and Support.

If a payment is pending or debited but not reflected, check its status before you pay again.

What can happen if a home loan stays overdue?

A home loan is secured against the property, so a prolonged overdue can have consequences beyond penal charges. A single missed EMI does not automatically put the property at risk, but it becomes overdue, attracts penal charges and is reported to credit bureaus in the lender's regular reporting cycle. A later payment does not remove the earlier entry. If a payment is not reflected in your credit report after the lender's next reporting cycle, you can raise a dispute through the official CIBIL process at cibil.com.

Continued non-payment over a prolonged period can lead to the account being classified as a non-performing asset (NPA) under applicable regulatory norms, and to recovery measures under the loan agreement and applicable law. Any action on the property is not immediate or automatic and must follow the contractual and legal requirements.

A legal notice should not be ignored. Read the stated dues, requirements and timeline, check them against your latest loan statement rather than only the amount on a payment screen, and respond within the stated timeline. If the amounts differ, raise the difference through Help and Support with your records.