Hi Team, I have taken SBI home loan 2 years back and while taking loan that bank person insisted to take property insurance but I have denied that as it was not required to me.
Now when Final 100% disbursement demand letter came from builder , I have provided required documents to bank person, but he responded below points to disburse final amount,
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Final disbursement
1) collect orginal receipt
2) collect demand letter
3) collect completion certificate
4) meet XXXX person and get done property insurance
5) final disbursement will happen after submitting all documents including insurance
6) submit at Vimanagar Racpc ground floor
7) No prior appointment
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So here point 4 and 5 he is mentioning its mandatory to have property insurance which I didn't think we need as customer.
Can anyone enlight if it's mandatory to take Property Insurance and does SBI Home Loans mentioned in somewhere its compulsory to take?
Note: I have LIC INSURANCE for my self so if anything happens amount can be recovered from it as loan amount is small.
Thanks
Below is the answer I got from RBI regarding the same query.
Madam/Dear Sir
Please refer to your mail below seeking information regarding requirement of buying insurance while seeking loans. In this connection, it is advised that credit related issues are mostly deregulated. The Reserve Bank of India has advised banks to have documents of investment policy, loan policy, loan recovery policy etc. prepared and duly vetted by their Boards of Directors. Banks are required to take credit related decisions based on board approved policies and extant regulatory framework as well as statutory provisions. You may refer to the Master Circular dated April 02, 2024 on ‘Housing Finance’ and Master Circular on ‘Loans and Advances – Statutory and Other Restrictions’ dated July 1, 2015, for detailed guidelines.
2. Further, you may refer to para 18(d)(v) of Master Direction- Reserve Bank of India (Financial Services provided by Banks) Directions, 2016 (updated as on August 10, 2021) dated May 26, 2016 which states that banks shall not follow any restrictive practices of forcing a customer to either opt for products of a specific insurance company or link sale of such products to any banking product and that it shall be prominently stated in all publicity material distributed by the bank that the purchase by a bank’s customer of any insurance products is purely voluntary, and is not linked to availment of any other facility from the bank.
3. It is also advised that in case of grievance and to lodge a complaint related to deficiency in service against an entity regulated by Reserve Bank of India i.e. a Regulated Entity (RE), the RE is the first focal point for redressal of customer complaints. If the grievance is not redressed / no reply is given by the RE concerned within a period of 30 days (or) if the complainant is not satisfied with the reply received / given by the RE, the complainant can lodge the complaint against the RE involving ‘deficiency in service’ with the Reserve Bank of India Ombudsmen (RBIO) / Consumer Education and Protection Cells (as applicable), online on the Reserve Bank of India's (RBI’s) Complaint Management System website
https://cms.rbi.org.in for immediate generation of the registration number and issue of acknowledgement to the complainant.
4. The Master Circulars and the Master Direction mentioned above are available on our website
www.rbi.org.in under the head 'Notifications'.
Direct links:
Master Circular on Housing Finance-
https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=12656
Master Circular on Loans and Advances-
https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=9902
Master Direction on Financial Services provided by banks-
https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10425
सादर /Regards
पंजीकरण एंड प्राधिकरण समूह / Registration and Authorization Group
विनियमन विभाग/ Department of Regulation
भारतीय रिज़र्व बैंक, केंद्रीय कार्यालय/ Reserve Bank of India, Central Office
मुंबई/ Mumbai 400001
