Transfer of Borrowal Accounts from One Bank to Another. Are you willing to transfer your Loan Account?

While Current Accounts/Savings Accounts cannot be transferred from One Bank to another Bank, Borrowal Accounts can be transferred from one Bank to another Bank.

The transferee bank remits the Balance due in the Borrowal account to the transferor bank, and subsequently the documents are also transferred.

Transfer of accounts can happen due to a variety of reasons; few reasons are a) Interest Rate b) Additional facilities etc

Complete information of the Borrowal account should be exchanged between the transferee bank and the transferor bank to ensure that there is slippage of the Asset Value in the transferee bank.

However, RBI has been receiving references/complaints that critical information on the health of the Borrowal accounts being taken over was not being shared by the transferor bank with the transferee bank. Due to this complete due diligence of the Borrowal Accounts at the time of taking over of accounts, was not being done.

To minimize information gaps, RBI, DBOD, vide notification dt10/05/2012 has provided additional guidelines.

The brief guidelines are:

There should be a Board approved policy. Broadly the policy should cover, amongst other things,

  • norms relating to the nature of the accounts that may be taken over,

  • authority levels for sanction of takeover,

  • reporting of takeover to higher authorities,

  • monitoring mechanism of taken over accounts,

  • credit audit of taken over accounts, examination of staff accountability especially in case of quick mortality of such cases after takeover,

  • periodic review of taken over accounts at Board /Board Committee level,

  • Top Management level, etc.


Further, the transferee bank should obtain necessary credit information from the transferor bank as per the format prescribed in circular DBOD.No.BP.BC.94/ 08.12.001/2008-09 dated December 8, 2008 on “Lending under Consortium Arrangement/Multiple Banking Arrangements”. (hyperlink)


This would enable the transferee bank to be fully aware of the irregularities, if any, existing in the borrower’s account(s) with the transferor bank.

The transferor bank, on receipt of a request from the transferee bank, should share necessary credit information as per the prescribed format at the earliest.



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