NOC Full Form: No Objection Certificate

Daily, people perform several banking tasks hinged on legal documents, and one such prominent document is the NOC. Property transactions orient around NOC, as getting approval for the real estate project is essential. In the case of property transactions, having a NOC is a must, as the absence of the same might interrupt your whole deal. Whether you are a builder, seller, or buyer, you will certainly need a NOC to execute a property purchase. Considering this legal document’s significance, a clear understanding of a NOC becomes important. 

To make it easy, we have encapsulated every vital information, from NOC full form to NOC format to its features.

What is the Full Form of NOC?

The full form of NOC in banking terms is a No Objection Certificate. It is a legal certification issued by a venture, organisation, entity, or individual. The NOC certifies that there is no obligation towards the information present within the legal documents. Denizens can use a no-objection certificate for trading, litigation, financing, migration, and other purposes. Having a NOC with you helps you to nullify the objection that you might encounter during the process.

In simple words, NOC means that the institution or involved parties have no objection to the mentioned object. Additionally, this legal document can be used in a court of law if required. In general, a NOC enlists the basic details about the involved parties.

Features of NOC

Here’s the list of basic features that a NOC supplies: 

• No Objection Certificate or NOC acts as evidence during court procedures.
• When you decide to borrow a second loan, NOC from the previous lender permits the same.
• NOC can be helpful in the maintenance of a good credit score, aiding in easy loan application approvals.
• When associated with a real estate project or property, it helps raise the property’s overall market value.
• A borrower with a NOC has a better chance of loan approval, contrary to one who doesn’t have a NOC.
• NOC is a prominent legal document certifying the individual doesn’t have liability towards the lender or any other financial institution.
• No Objection certificate nullifies all the objections the party might raise towards the client.

Now that you are acquainted with the NOC full form and its features, you must understand the benefits you can secure from this essential legal document, i.e. no objection certificate. 

Advantages of NOC

NOC comes with the below-depicted advantages:

• Consider it as a legal document serving as a piece of evidence, specifically during disputes associated with the settlement of a mortgage.
• You can use it to resolve any futuristic discrepancies.
• Cater to upgrade credit score by escalating a NOC towards the Credit Information Bureau
• Procuring additional loans becomes easy with a NOC from the previous lender or financial institution.
• Acts as a legal certification to indicate that no monetary obligations are correlated with the bank or finance provider

Who Issues NOC?

When you know the importance of NOC, especially in banking procedures, the next crucial thing to get familiar with is who is responsible for the issuance of NOC. Generally, it entirely depends upon the process for which you seek a NOC. Here’s who can issue a NOC:

• Banks and Financial Institutions: Lenders issue a NOC as soon as all liabilities and dues of the individual are cleared.
• Colleges: educational institutions issue NOCs when the student pays the semester or annual fee asked by the institution. Usually, such NOCs are required when a student secures an educational loan from the bank to pursue higher studies. 
• Companies or Organisations: Such NOCs are required by the employees while terminating their job or switching to other ventures to fulfil the resignation criteria.

Format of NOC

Any organisation or body may issue a No Objection Certificate saying that they do not object to the covenants listed in the certificate. Finance providers usually issue a No Objection Certificate in case of a loan closure, certifying that the borrower has paid off all obligations related to the loan and that the loan officially ends in the institution’s records. The financial institution releases its claims on the collateral security provided as security for the specific loan with the receipt of the NOC.

When a bank or financial institution issues a NOC, it contains the depicted details:

• Name
• Address of the Property (when associated with a mortgage)
• Brief Details of the Loan
• Date and time of loan closure.

In the event of a loan closure, the banks/NBFCs are bound to disburse the NOC to your registered contact address on file. If your contact information has changed while your loan has been outstanding or during loan repayment tenure, you must have the bank or NBFC amend its records.

When the education loan borrower, i.e. student, deposits the fees to the college authority according to the fee structure, the designated person will issue a NOC. In addition, this must be submitted to the bank executive handling your loan application. 

When an employee resigns and has satisfactorily completed all tasks allocated to them, the employer will be responsible for the issuance of a NOC.

When is a NOC Required?

The term “NOC,” or “No Objection Certificate,” refers to a legal document required for many different types of projects, bank loans, and business transactions hinged on objection possibilities. Getting NOC for any task is very beneficial since if someone objects later, you won’t be held legally responsible as you already have NOC. In addition, organisations grant NOC in several circumstances, including the ones listed below:

For the Repayment of a Loan (Loan Closure or Foreclosure) 

If you’ve ever secured a loan from a bank or financial institution and repaid it on time, regardless of the cause, you will require a NOC for the same. In this situation, your lender will issue a NOC rectifying the received payment. If the bank fails to do so from the end, you have the authority to request a certificate stating you have repaid the borrowed amount. 

Taking Out a Loan 

Banks require a NOC certificate and various other documents if you want to borrow money from them for any reason. The document tells the bank that you haven’t withdrawn a loan from another lender. The NOC will help to rectify on-time payments if you have an ongoing loan. 

Purchasing Vehicles Through Monthly Instalments

When you successfully pay the instalments associated with the vehicle’s finance, you must obtain a NOC from the financing company. The NOC for the same will prove that you have paid the borrowed amount to the financier.  

Intra-State Transfer of Vehicle

According to the Indian Motor Act, you will require a NOC from the RTO or State Transport Office while transporting a car outside your state. It will apply when you take out your vehicle from the state for over three months.

When Securing a Home Construction Loan

If you intend to build a home, you will require a NOC issued by the local municipality council or municipal corporation. In addition, you will have to secure a No Objection Certificate from the traffic department. This is essential, as it acts as proof stating that the construction is approved in mapping. Having a NOC from the traffic department will eliminate the futuristic hurdles associated with illegal developments or anything else. 

Essential Documents to Get the No Objection Certificate

To secure a NOC, you may require specific documents. Preparing these documents beforehand will help get the required NOC without any interruption. Here’s the list of documents that you will require to get the No Objection Certificate: 

• Identity Proof and Residence Proof
• Proof rectifying that you have paid all instalments

Based on the lender’s discretion, you may also have to prepare some other documents. However, the banks and financial institutions send the No Objection Certificate to the registered address once you are done with the full repayment of the loan. 

Note: There are possibilities that you may not receive the NOC from the bank, so be proactive and ask for the same by making an in-person visit to the bank branch. 

What Happens in the Absence of a NOC?

Nothing seems to be possible without a NOC, from the purchase of property to loan repayments. So, if you don’t have a no-objection certificate, you might face certain consequences. Here’s what happens when you don’t have the NOC: 

• A no-objection certificate helps to assess the full payment of all dues. If you don’t get it back, unpleasant things could happen, such as the lender making you pay back debts that have already been paid. Do not put off gathering the required paperwork because it is challenging to demonstrate that you have paid the bills without authenticated proof, such as a NOC.
• Without a NOC, the bank or financial institution may drag you into a legal battle, making it difficult for you to support your claim.
• You must either obtain the NOC or ensure that the lender notifies CIBIL on your behalf. If you don’t, it will be assumed that you didn’t repay the loan, which could lower your credit score and make it more challenging for you to obtain loans in the future. 

A No Objection Certificate, also known as a No Dues Certificate, is a legally binding document that certifies that a loan has been entirely returned. Once your loan is completely off, it’s crucial to be proactive and ask your lender to provide you with a NOC if they haven’t already. After reading the material above, it is obvious that obtaining a NOC can shield you from some legal responsibilities. At the same time, it streamlines daily chores related to paperwork.