NDC full form in banking is No Due Certificate. It is a document issued by a bank or financial institution to confirm that a borrower has settled all their dues and there are no outstanding liabilities against their loan or account. This certificate is essential when a borrower has repaid the full loan amount or closed their account, and it serves as proof that no further payments are required.
How NDC Works?
Once a borrower clears all dues, including the principal amount, interest, and any other applicable charges, they can request the bank to issue an NDC. The bank verifies that the loan has been fully repaid and that no dues are pending. After the verification, the bank issues the No Due Certificate, confirming that there is no remaining debt on the account.
Importance of NDC
- Loan Closure: NDC acts as proof that a loan has been fully settled and that no further payments are needed. It is often required to officially close a loan account.
- Account Transfer: If a borrower wants to transfer their account to another bank, the NDC is usually required as confirmation that there are no outstanding dues.
- Legal Protection: The certificate ensures that the borrower has met all their financial obligations, reducing the risk of future disputes regarding the loan.
When is NDC Required?
- Loan Repayment Completion: NDC is typically requested after the borrower has cleared all payments on the loan.
- Account Closure: When closing a loan or deposit account, an NDC is required.
- Transfer of Loan Account: It is necessary for transferring a loan from one bank to another or for switching financial institutions.