NEW DELHI: In a major relief, the removal of hypothecation from vehicles will now happen automatically through an online system once loan is fully repaid, saving people from the hassle of multiple visits to transport offices and reaching out to banks. The road transport ministry has rolled out this new system, starting March 1 (Monday), initially with one nationalised bank and five Non-Banking Financial Companies (NBFC). More will be roped in soon.The move is aimed at eliminating procedural delays, and reducing inconvenience faced by borrowers in getting their vehicle records updated after clearing their loans and visiting regional transport offices to initiate removal of hypothecation from vehicle registration certificate. The process often involved multiple visits and significant paperwork.Officials said the system operates using RBI’s Unified Lending Interface (ULI), which enables secure and real-time data exchange between lenders and govt platforms. “The online interface interacts among banks, ULI and the Vahan system. So, the entire process, including the verification, happens 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 govt’s initiative to improve ease of living,” said an official.Separately, after the vehicle owner repays the loan, the bank will send the ‘No Objection Certificate (NOC)’ to the owner.At present, SBI and five NBFCs, including Cholamandalam, Shriram Finance and Sundaram Finance, have started implementing this system. Officials said more banks and financial institutions will be onboarded onto the system in phases to ensure wider coverage and seamless implementation nationwide. They added that initiative will significantly reduce processing time and improve transparency.Welcoming the initiative, transport services expert Anil Chhikara said while banks and financing institutions take care of all hypothecation issue when one takes a loan to buy a vehicle, these institutions don’t help customers in the process when they repay the loans.
