ANI file photo New Delhi: In a major relief, hypothecation from vehicles will be automatically removed through an online system once the loan is fully repaid, freeing people from the hassle of frequent visits to transport offices and reaching out to banks. The road transport ministry has rolled out this new system from March 1 (Monday), initially with one nationalized bank and five non-banking financial companies (NBFCs).

More steps will be taken soon. The move aims to eliminate procedural delays, and reduce the inconvenience faced by borrowers in updating their vehicle records after repaying their loans and visiting regional transport offices to remove hypothecation from the vehicle registration certificate. The process often involves multiple visits and significant paperwork.

Officials said the system operates using the RBI’s Unified Lending Interface (ULI), which enables secure and real-time data exchange between lenders and government platforms. “The online interface interacts between banks, ULI and the vehicle system. Hence, the entire process including verification happens without any human intervention.

Once the process is completed, the owner receives an SMS from the vehicle informing him about the removal of hypothecation. This is part of the government’s initiative to improve ease of living,” an official said.

And five NBFCs including Cholamandalam, Shriram Finance and Sundaram Finance have started implementing this system. Officials said more banks and financial institutions will be included in the system in phases to ensure wide coverage and seamless implementation across the country.

He said that this initiative will significantly reduce processing time and improve transparency. Welcoming the initiative, transport services expert Anil Chhikara said that when someone takes a loan to buy a vehicle, banks and financing institutions take care of all the hypothecation issues, but when customers repay the loan, these institutions do not help them in the process.