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Central Office ZONAL OFFICES
Issuing dept: Law
Chennai 600 002
Sub: Amendments to the loan documents pursuant to switching over to MClR linked
interest
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We draw reference to Circular No. Adv / 4/ 2016-17 dated 05.04.2016 of Banking
Operations Department on Interest to be charged based on MCLR.
We give below the guidelines for obtaining documents for MCLRlinked loans:
The above two documents are enclosed as Annexure 1 and 2 respectively with this
circular.
Regarding the loan documents other than DPN, if interest clause with "Base Rate"
appear, the clause may be deleted with a cross mark (X) and the words "Interest
rate is applicable as per Demand PromissoryNote dated " should be written
and such writing should be authenticated through counter signature of the
borrower(s) alongside in the margin on the document.
As far as existing loans are concerned, option has been given to the borrowers to
switch over to MCLR linked rate of interest. If such option is exercised by the
borrower, a request letter has to be obtained from the said Borrower(s) arid the
respective Guarantors in the format enclosed as Annexure 3 herein, preferably with
balance confirmation letter. Kindly note that for each facility / loan, a separate
letter has to be obtained. The guarantors should sign with date if they countersign
the borrower's letter subsequently.
Loan documents obtained from 01.04.2016 till date with old 14A Revised with Base
Rate clause:
In such cases, it is not necessary to disturb the DPN and other loan documents
already obtained during this period. It would be sufficient to obtain Annexure 3 from
the.borrowers and guarantors and preserved with other loan documents.
It isstipulated that the existing loans linked to Base Rate will continue till repayment /
renewal as the case may be. Hence at the time of renewal, the account has to be
automatically governed by MCLR linked interest rate, if not already opted. In such.
circumstances of renewal, a letter as per Annexure 4 to this circular should be
obtained from the Borrowersand the respective Guarantors preferably with balance
confirmation letter.
Branches/ Regional Offices may be advised to take note of the above, understand
the contents of the Annexures for explaining the implications to the borrowers/
guarantors.
ct·
ANNEXURE 1
Rs · . . Place .: .
Date .
On demand 1/ We ~ : jointlv
and severally promise to pay to Indian Overseas bank, or Order, the sum of
Rs (Rupees only) for value received together with floating
interest thereon at Overnight/ 1 month/ 3 month/ 6 month/ one year/ two year/
three year/*'Marginal Cost of funds based Lending Rate (MCLR) of the Bank now
being % plus % per annum (total % Per annum) from this date with
............. rests or at such rates as may be re-set and rests as may be revised by the
Bank on itsown or as per the instructions of Reserve Bank of India from time to time.
,
Revenue
stamp/
signature
In caseof discrepancy between the English version and translated version in other languages, English version
shall prevail.
In caseof discrepancy in the interest rate between this DPN and hypothecation agreement for the same loan /
credit facility, interest rate mentioned herein shall prevail. .
Undertaking Letter from the new borrowers after introduction of interest linked with
MCLR instead of Base Rate.
Place: .
Date
The Branch Manager
.lndion Overseas Bank
.................. Branch
Dear Sir,
1. The interest rate applicable for the credit facility /Ioan availed by me/ us is linked to
Marginal Cost of funds based Lending Rate (MCLR)and the interest rate applicable
to my/ our credit facility /Ioan is Overnight/ 1 month / 3 month / 6 month / 1 year/2
. year/ 3year/ * MCLR which is at present % plus % per annum (total % per
annum) .
.2. The interest will be re-set periodically as per Bank's sanction and lending policy:
3. As MCLRis floating rate, we are agreeable to abide by the terms of floating rate of
interest and we are agreeable to pay the dues as per the revised/re-set rate plus
spread as and when it changes.
4. 1/ We· also understand that the EMI fixed may undergo change in number of
instalments and amount as per the revised / re-set interest / rests and agree to remit
the instalments as per such change without raising any dispute on this count. **
BORROWER(s)
Contents noted -
GUARANTOR(S)
(signature with date, if signed subsequently)
Request letter from the existing borrowers opting for floating rate of interest linked to MCLR.
Place:
Date:
In view of introduction of new norms in the interest rate namely Marginal Cost of funds based
Lending Rate (MCLR) which I/we consider beneficial to me/us in long run, I/we hereby
request you to change the interest rate link from the Base rate to applicable MCLR with
effect from today. .
The interest rate applicable to my I our credit facility I loan is overnightl 1month I 3 month I
6 month I 1 yearl 2 yearl 3 yearl * MCLR which is at present % plus % per annum
(total... % per annum).
II We further understand and agree that the interest will be re-set periodically and
accordingly the interest rate will change.
As MCLRis floating rate, we are agreeable to abide by the terms of floating rate of interest
and we are agreeable to pay the dues as per the revised/re-set rate plus spread as and
When it chahges.
II We 'also understand that the EMIfixed may undergo change in number of instalments and
amount as per the revised I re-set interest I restsand I I We agree to remit the instalments as
per such change without raising any dispute on this count, **
Thisrequest is only for switching over of interest rate to MCLR and there is no other chcnqe in
the terms & conditions of earlier loan documents already executed by mel us.
BORROWER(S)
Contents noted -
GUARANTOR(S)
(signature with date, if signed subsequently).
Place:
Date:
Myl Our subject loan is due for renewal on In view of introduction of new norms in the
interest rate namely Marginal Cost of funds based Lending Rate (MCLR) which hos to be
applied for the existing loans at the time of renewal as per RBIguidelines, I/we hereby agree
as below:
The interest rate applicable to my I our credit facility I loan is overnightl 1month 13 month I
6 month I 1 yearl 2 yearl 3 yearl * MCLR which is at present % plus % per annum
(total % per annum) from .
II We further understand and agree that the interest will be re-set periodically and
accordingly the interest rate will change.
As MCLR is floating rate, we are agreeable to abide by the terms of floating rate of interest
and we are agreeable to pay the dues os per the revised/re-set- rate plus spread as and
when-it changes.
II We also understand that the EMI fixed may undergo change in number of instalments and
amount as per the revised I re-set interest I rests and I I We agree to remit the instalments as
per such change without raising any dispute on this count. ** .
This letter is only for switching over of interest rate to MCLR and there is no other change in
the terms & conditions of earlier loan documents already executed by mel us;
BORROWER(S)
Contents noted -
GUARANTOR(S)
(signature with date, if signed subsequently)
Place:
Date:
1/ We. have availed the subject loan from your bank. At my/ our request, the bank has
considered enhancement of loan amount from Rs to Rs .
In view of introduction of new norms in the interest rate namely Marginal Cost of funds based
Lending Rate (MCLR)which has to be applied for the existing loans at the time of renewal as
per RBIguidelines, I/we hereby agree as below:
The interest rate applicable to my/ our credit facility / loan is Overnight/ 1month / 3 month /
6 month / 1 year/ 2 year/ 3~ear/ * MCLR which is at present % plus % per annum
[totol..' % per annum) from .
1/ We further understand and agree that the interest will be re-set periodically and
accordingly the interest rate will change.
As MCLR is floating rate, we are agreeable to abide by the terms of floating rate of interest
and we are agreeable to pay the dues as per the revised/re-set rate plus spread as and
when it changes.
1/We also understand that the EMI fixed may undergo change in number of instalments and
amount as per the revised / re-set interest / restsand I / We agree to remit the instalments as
per such change without raising any dispute on this count. **
Thisletter is only for switching over of interest rate to MCLR and there is no other change in
the terms & conditions of earlier loan documents already executed by me/ us.
BORROWER(S)
Contents noted -
GUARANTOR(S)
(signature with date, if signed subsequently)