3 min
24-March-2025
A personal loan can be a financial lifesaver when you need funds for emergencies, big-ticket purchases, or debt consolidation. However, repaying the loan involves Equated Monthly Installments (EMIs), which consist of both principal and interest. Lenders calculate the EMI based on the loan amount, interest rate, and tenure. A longer tenure results in lower EMIs but higher total interest payments, while a shorter tenure increases the EMI but reduces the overall interest burden.
Understanding EMI deductions is crucial for efficient financial planning. Unlike home loans or education loans, personal loan EMIs are generally not eligible for tax deductions unless the borrowed amount is used for specific purposes like home renovation or business investment. Some lenders offer flexible EMI options, such as step-up or step-down plans, to suit different financial situations. Before taking a loan, using an EMI calculator helps estimate repayment obligations and ensures affordability within your budget.
Wrong IFSC Code – Providing an incorrect IFSC code may lead to transaction failures, delaying EMI payments.
Mismatched account holder name – If the name on the bank account does not match the name registered with the lender, the deduction process may face issues.
Mistyped details in loan application – Manual errors while filling out loan applications can cause incorrect linking of accounts.
Use of closed or dormant accounts – If the provided bank account is inactive, closed, or dormant, EMI deductions will not be processed successfully.
Change in account type – If the business shifts from a savings to a current account (or vice versa), the old account may no longer support EMI deductions.
Multiple business accounts confusion – Companies with multiple accounts may mistakenly link the wrong one for EMI deductions.
Change in signatories or authorisation – Business accounts often require authorized signatories; any changes without notifying the lender can lead to deduction issues.
Technical issues during transition – Transferring funds from one business account to another can cause delays, impacting EMI transactions.
Delayed account updates – If the borrower updates account details but the lender does not process the change on time, deductions may happen from an incorrect account.
Technical glitches in auto-debit setup – Errors in the lender’s auto-debit system can lead to wrong accounts being charged.
Failure to register the correct mandate – If the NACH (National Automated Clearing House) mandate is not properly registered, deductions may occur from the wrong account.
Lender’s internal record mismatch – In some cases, outdated or incorrect records maintained by the lender can result in deductions from an unintended account.
Review the required documents, processing time, and any associated charges.
Check if the change can be done online or if a physical visit to the branch is required.
Request guidance on the procedure and confirm the correct steps to follow.
Obtain the necessary forms or links to update the EMI deduction account.
Submit a fresh NACH (National Automated Clearing House) mandate to authorize the new bank account.
Provide necessary documents such as a canceled cheque, updated bank details, and ID proof if required.
Ensure all information is accurate to avoid processing delays.
Check confirmation emails or SMS notifications for updates.
Monitor the next EMI deduction to ensure it is debited from the correct account.
Keep records of communications and approvals for future reference.
Borrowers should ensure all documents are correctly filled and submitted to avoid delays in processing the EMI deduction update.
Processing time by the lender
Typically, lenders take 5-7 business days to process the request for changing the linked bank account.
Some lenders may take longer, especially if additional verification is required.
Mode of request submission
Online requests – Digital submissions via the lender’s portal are processed faster, often within 3-5 business days.
Offline requests – Requests submitted via branch visits or couriered documents may take up to 7-10 business days.
Verification of documents
The speed of updating the linked account depends on the accuracy of the submitted documents.
If documents such as the NACH mandate or cancelled cheque are incorrect or incomplete, the process may be delayed.
Bank authorisation and approval
The bank must verify the new account details before the lender can update them.
Some banks require additional authentication, extending the timeline by a few extra days.
Holidays and non-working days
Weekends and bank holidays may delay the processing time.
Public holidays in different regions can further slow down the update process.
Impact on EMI deductions
Borrowers should ensure that the update is completed before the next EMI due date to avoid failed transactions.
In case of a delay, it’s advisable to keep sufficient funds in both the old and new accounts to avoid missed payments.
Checking status of the update
Lenders typically send SMS or email notifications confirming the account update.
Borrowers can also track the status by logging into their lender’s online portal or contacting customer support.
For more information on personal loan details and personal loan prepayment charges, visit the respective links.
Understanding EMI deductions is crucial for efficient financial planning. Unlike home loans or education loans, personal loan EMIs are generally not eligible for tax deductions unless the borrowed amount is used for specific purposes like home renovation or business investment. Some lenders offer flexible EMI options, such as step-up or step-down plans, to suit different financial situations. Before taking a loan, using an EMI calculator helps estimate repayment obligations and ensures affordability within your budget.
Common reasons for wrong linked accounts in EMI deduction
EMI deductions are an essential part of loan repayment, ensuring timely payments and maintaining a good credit score. However, incorrect linking of bank accounts can lead to failed transactions, penalties, and financial stress. Below are the common reasons for wrong-linked accounts in EMI deduction:Errors in bank details provided
Incorrect account number – Entering an incorrect bank account number can result in failed deductions or payments being debited from the wrong account.Wrong IFSC Code – Providing an incorrect IFSC code may lead to transaction failures, delaying EMI payments.
Mismatched account holder name – If the name on the bank account does not match the name registered with the lender, the deduction process may face issues.
Mistyped details in loan application – Manual errors while filling out loan applications can cause incorrect linking of accounts.
Use of closed or dormant accounts – If the provided bank account is inactive, closed, or dormant, EMI deductions will not be processed successfully.
Changes in business bank accounts
Account migration to another bank – Businesses often switch banks for better services, but failure to update the lender can lead to EMIs being deducted from an old account.Change in account type – If the business shifts from a savings to a current account (or vice versa), the old account may no longer support EMI deductions.
Multiple business accounts confusion – Companies with multiple accounts may mistakenly link the wrong one for EMI deductions.
Change in signatories or authorisation – Business accounts often require authorized signatories; any changes without notifying the lender can lead to deduction issues.
Technical issues during transition – Transferring funds from one business account to another can cause delays, impacting EMI transactions.
Issues from the lender’s side
Processing errors by the bank – Sometimes, the bank itself processes the wrong account due to internal mistakes.Delayed account updates – If the borrower updates account details but the lender does not process the change on time, deductions may happen from an incorrect account.
Technical glitches in auto-debit setup – Errors in the lender’s auto-debit system can lead to wrong accounts being charged.
Failure to register the correct mandate – If the NACH (National Automated Clearing House) mandate is not properly registered, deductions may occur from the wrong account.
Lender’s internal record mismatch – In some cases, outdated or incorrect records maintained by the lender can result in deductions from an unintended account.
Steps to change the linked account for EMI deduction
If you need to update the bank account linked to your EMI deductions, follow these steps:Step 1: Check lender’s policy on account changes
Visit the lender’s website or contact customer support to understand their policy on changing linked accounts.Review the required documents, processing time, and any associated charges.
Check if the change can be done online or if a physical visit to the branch is required.
Step 2: Contact the bank or lender via customer service
Reach out to the lender’s customer service through phone, email, or branch visit.Request guidance on the procedure and confirm the correct steps to follow.
Obtain the necessary forms or links to update the EMI deduction account.
Step 3: Submit required documents like a new NACH mandate
Fill out the account change request form provided by the lender.Submit a fresh NACH (National Automated Clearing House) mandate to authorize the new bank account.
Provide necessary documents such as a canceled cheque, updated bank details, and ID proof if required.
Ensure all information is accurate to avoid processing delays.
Step 4: Confirm the update and monitor deductions
Follow up with the lender to verify that the new account has been successfully linked.Check confirmation emails or SMS notifications for updates.
Monitor the next EMI deduction to ensure it is debited from the correct account.
Keep records of communications and approvals for future reference.
Documents required for changing the EMI deduction account
To update the bank account linked for EMI deductions, lenders typically require the following documents:| Document Type | Purpose |
| Account Change Request Form | Official request to update linked bank account |
| New NACH Mandate Form | Authorizes EMI deduction from the new account |
| Cancelled Cheque | Verifies the new account details |
| Bank Account Statement | Confirms account ownership and transactions |
| Identity Proof | Confirms the borrower's identity (Aadhaar, PAN, etc.) |
| Address Proof | Ensures records are updated correctly |
| Lender’s Authorisation Letter (if required) | Required in some cases for processing updates |
Borrowers should ensure all documents are correctly filled and submitted to avoid delays in processing the EMI deduction update.
How long does it take to update the linked account?
The time taken to update the bank account linked for EMI deduction varies depending on the lender and the documentation process. Below are key factors affecting the update duration:Processing time by the lender
Typically, lenders take 5-7 business days to process the request for changing the linked bank account.
Some lenders may take longer, especially if additional verification is required.
Mode of request submission
Online requests – Digital submissions via the lender’s portal are processed faster, often within 3-5 business days.
Offline requests – Requests submitted via branch visits or couriered documents may take up to 7-10 business days.
Verification of documents
The speed of updating the linked account depends on the accuracy of the submitted documents.
If documents such as the NACH mandate or cancelled cheque are incorrect or incomplete, the process may be delayed.
Bank authorisation and approval
The bank must verify the new account details before the lender can update them.
Some banks require additional authentication, extending the timeline by a few extra days.
Holidays and non-working days
Weekends and bank holidays may delay the processing time.
Public holidays in different regions can further slow down the update process.
Impact on EMI deductions
Borrowers should ensure that the update is completed before the next EMI due date to avoid failed transactions.
In case of a delay, it’s advisable to keep sufficient funds in both the old and new accounts to avoid missed payments.
Checking status of the update
Lenders typically send SMS or email notifications confirming the account update.
Borrowers can also track the status by logging into their lender’s online portal or contacting customer support.
For more information on personal loan details and personal loan prepayment charges, visit the respective links.
