PART PREPAYMENT REQUEST
Date: __________
Place: __________
To
The Branch Manager
__________
__________
Mode of delivery: __________
LOAN ACCOUNT NO.: __________
Borrower: __________
Facility: __________ — __________ rate of interest
Address on record: __________
Mobile: __________ | Email: __________
Subject: Part prepayment of __________ towards principal — __________
Dear Sir / Madam,
1. The payment.
I have paid __________ to you as a part prepayment against the principal outstanding in the above loan account.
Date of payment: __________
Mode of payment: __________
Payment reference: __________
2. Where the money must go.
Please apply the whole of this amount to the principal outstanding, with effect from the date on which the funds reached you. Please do not hold it as an advance EMI, do not park it in a suspense, unapplied or unadjusted account (save as provided in paragraph 8 below), and do not appropriate it towards future instalments, towards interest that has not yet accrued, or towards any charge. Interest from that value date should be computed on the reduced principal.
3. My instruction on the revised terms — __________.
This is my express instruction. Please record it on the account and give effect to it. Please do not apply your standard or default option in place of it. The rate of interest on the loan is not to change as a consequence of this prepayment. If your system cannot give effect to the instruction as written, please tell me in writing before you process the account, and do not apply the prepayment in the other manner without my written consent.
4. What I need back from you, and by when.
Within 7 working days of the date of this letter, please send me — by email to __________ and by post to the address on record above:
(a) written confirmation that the amount has been applied to principal, with the value date;
(b) the revised principal outstanding after the prepayment;
(c) a fresh amortisation schedule for the balance of the loan, showing the EMI, the rate of interest, the number of instalments remaining and the date of the final instalment;
(d) confirmation of the revised EMI and the date from which it takes effect or, where the EMI is unchanged, the revised final instalment date; and
(e) if my existing NACH or ECS mandate has to be amended or replaced as a result, the form you require and the date by which you need it.
Until items (a) to (e) reach me, please continue to present the existing EMI as usual, so that the account does not fall into arrears through this request.
5. Prepayment charges.
My loan carries a __________ rate of interest. I am an individual borrower and this loan was not taken for business purposes.
5.1 If you are a bank: no foreclosure charge and no prepayment penalty is payable on a floating rate term loan sanctioned to an individual borrower. RBI circular DBOD.Dir.BC.No.110/13.03.00/2013-14 dated 2 June 2014, carried forward in the Master Circular on Customer Service in Banks, states that bar without any qualification as to the purpose of the loan. If you are a housing finance company or another non-banking financial company: no foreclosure charge and no prepayment penalty is payable on a floating rate term loan sanctioned to an individual borrower for a purpose other than business — see the Master Direction – Non-Banking Financial Company – Housing Finance Company (Reserve Bank) Directions, 2021 dated 17 February 2021, and the Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023 dated 19 October 2023.
5.2 For loans sanctioned or renewed on or after 1 January 2026, the Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025 dated 2 July 2025 state the position in wider terms still: no prepayment charge is to be levied on a floating rate loan given to an individual for a purpose other than business, whether the prepayment is in part or in full, irrespective of the source of the funds, and with no minimum lock-in period.
5.3 On a fixed rate loan the position turns on my sanction letter and loan agreement, read with the instruction that applies to you as a regulated entity. A housing finance company is in addition barred from levying foreclosure charges on a fixed rate loan foreclosed by the borrower out of their own sources.
5.4 Accordingly, please do not debit any prepayment, part-payment, foreclosure or processing charge to this account without first telling me, in writing, the amount of the charge, the clause of the sanction letter or loan agreement you rely on, and the Reserve Bank instruction you say permits it. If a charge is properly payable I will pay it separately. It is not to be taken out of the amount at paragraph 1, which is paid towards principal.
6. Right to prepay, and the statement of account.
Where a loan is on a floating rate, RBI's circular on Reset of Floating Interest Rate on Equated Monthly Instalment based Personal Loans, DOR.MCS.REC.32/01.01.003/2023-24 dated 18 August 2023 — a category that includes housing loans — requires that the borrower be permitted to prepay, in part or in full, at any point during the tenor of the loan, and requires the lender to provide a statement at the end of each quarter showing the principal and interest recovered to date, the EMI amount, the number of EMIs left, and the annualised rate of interest for the entire tenor. Please treat this letter as a request for that statement as well, updated for this prepayment.
7. Credit reporting.
Please ensure that the reduced outstanding is reported to the credit information companies in your next reporting cycle. Since 1 January 2025 credit information is to be reported at fortnightly intervals, so the reduction should appear on my credit report within about three weeks of it being applied.
8. If any part of this cannot be done.
If the amount, or any part of it, cannot be applied as I have asked — because of a minimum or maximum part-prepayment limit, a lock-in, a cap on the number or value of part prepayments in a year, or anything else in my loan agreement — please tell me in writing within 7 working days, quoting the clause you rely on, and hold the funds pending my further instructions. Please do not return the money without telling me first, and please do not apply it in a manner I have not asked for.
9. If I hear nothing.
If the confirmation and the fresh amortisation schedule do not reach me within 7 working days, I will take the matter up in writing with your Principal Nodal Officer or Grievance Redressal Officer under your grievance redressal policy. If that written complaint is not resolved within thirty days of my making it, or if the reply I receive is not satisfactory, __________ I hope that will not be necessary.
10. Acknowledgement.
Please acknowledge receipt of this letter, either by signing and stamping the duplicate copy handed over with it, or by email to __________.
Thank you.
Yours faithfully,
_______________________________
__________
Borrower
Mobile: __________ | Email: __________
Enclosures
- Proof of payment — __________, reference __________, dated __________.
- Duplicate copy of this letter, for acknowledgement.
FOR ACKNOWLEDGEMENT AT THE COUNTER (to be completed on the duplicate copy)
Received at ................................................................ branch / office of __________
Loan Account No. __________
Date: .............................. Time: ..............................
Name of official: ................................................................
Employee code: ................................................................
Signature and branch stamp:
NOT PART OF THE LETTER — KEEP THIS PAGE IN YOUR OWN FILE
A. Proof of delivery. These letters go missing. Do one of the following and keep the proof:
(i) hand over two signed copies at the branch and have the duplicate stamped, dated and signed in the box above;
(ii) email the signed and scanned letter, from the email address registered on the loan account, to the branch and to the customer service address printed on your repayment statement, and keep the sent mail; or
(iii) send it by registered post with acknowledgement due and keep the posting receipt and the returned A.D. card.
A phone call, a chat window or an in-app ticket is not proof. If you use one of those as well, note the reference number on your copy.
B. Which instruction saves more money. Reducing the tenure saves considerably more interest than reducing the EMI. If the EMI stays the same, a larger share of every future instalment goes to principal, the loan closes earlier, and total interest falls sharply. If you reduce the EMI instead, the loan still runs to its original end date and the saving is much smaller. Reduce the EMI only if the current instalment is genuinely straining your monthly cash flow. Whichever you choose, say it in writing — a lender that is not told will apply its own default, which differs from lender to lender and may not be the one you want.
C. If nothing comes back — the escalation ladder.
Step 1 — the branch. Follow up in writing on the same email thread. Quote the loan account number every single time. Ask for a complaint reference number and note it.
Step 2 — the Principal Nodal Officer or Grievance Redressal Officer. Every bank and NBFC must publish the name, designation, address, email and telephone number of its Principal Nodal Officer for grievances, and a housing finance company must publish the same details for its Grievance Redressal Officer; both must be displayed at the branch and on the website. Write there, attaching this letter, the payment proof and the branch acknowledgement.
Step 3 — the ombudsman or the regulator, and which one depends on what kind of lender you have. This is the step borrowers most often get wrong, so settle your lender's category before you file.
• A bank, or a non-banking financial company covered by the Scheme. Complain to the RBI Ombudsman under the Reserve Bank – Integrated Ombudsman Scheme, 2026, which came into force on 1 July 2026 and replaced the earlier scheme. You may complain once either (a) you have made a written complaint to the lender and thirty days have passed without a reply, or (b) you have received a reply you are not satisfied with. The complaint must then be made within ninety days — of the reply, or of the expiry of those thirty days where no reply came. This is a short window; do not sit on it. File online at cms.rbi.org.in, or by post to the Centralised Receipt and Processing Centre, Reserve Bank of India, 4th Floor, Sector 17, Chandigarh 160017. The helpline is 14448. There is no fee.
• A housing finance company. The RBI Ombudsman is not open to you. Housing finance companies are expressly excluded from the Reserve Bank – Integrated Ombudsman Scheme, 2026, as are core investment companies, infrastructure debt fund NBFCs, infrastructure finance companies, non-operative financial holding companies, primary dealers and mortgage guarantee companies. Several of the largest home lenders — LIC Housing Finance, PNB Housing Finance, Bajaj Housing Finance and others whose registered name carries the words "Housing Finance" — are in this category. Take the complaint to the company's own Grievance Redressal Officer, and then to the National Housing Bank through its grievance registration portal. Filing with the RBI Ombudsman instead only wastes the time you have.
Attach this letter, the payment advice, the acknowledgement, and the lender's reply if there is one.
D. What to keep, and what to check. Keep this letter with the branch acknowledgement, the payment advice or UTR, the revised amortisation schedule and the lender's written confirmation of the revised terms, together in one place for the life of the loan. Then check your next two statements yourself: confirm the reduced principal actually appears, confirm the EMI or the final instalment date has changed the way you asked, and confirm no prepayment charge has been quietly debited.