Your Rights With a Housing Finance Company: The 60 Day Exit and Other RBI Rules

A Bengaluru couple signs up with a housing finance company for a flat in Whitefield. Eight months later, a notice arrives in dense English: the company is revising a service charge and the method for calculating something called the spread. They are not sure whether it raises their cost, what they can do about it, or whether they are stuck with the lender until the loan ends.

RBI's current rules for housing finance companies answer those questions more directly than most borrowers realise. They cover the language of communication, what a sanction letter must contain, written reasons for rejection, and a 60 day window to exit or switch without extra charges if terms change to your disadvantage. This guide explains those rules for Bengaluru buyers borrowing from an HFC. It is buyer guidance on borrower rights, not advice on choosing a lender.

The short answer. RBI's Housing Finance Companies Directions, 2025 and its NBFC Responsible Business Conduct Directions, 2025, which list HFCs among the companies they cover, say communications should be in the vernacular or a language the borrower understands, the sanction letter must state the annualised rate and its method of application with late payment penalties in bold, rejection reasons must be given in writing, and changes in rates and charges apply only prospectively. If a change works to your disadvantage, you may within 60 days close or switch the account without extra charges or interest. The trade-off: the 60 day clock starts with the change, so you must read every notice promptly and act quickly to use it.

Which rules apply to a housing finance company loan?

Two RBI documents, read together. The Housing Finance Companies Directions, 2025, shown on RBI's website as updated on October 1, 2026, contain a Fair Practices Code chapter. Several of its paragraphs then point to the NBFC Responsible Business Conduct Directions, 2025, shown as updated on July 1, 2026, whose applicability clause lists HFCs registered with RBI under the National Housing Bank Act, 1987.

The HFC Directions say the code applies to all products and services, whether provided by the HFC, its subsidiaries or digital lending platforms, across the counter, by phone, by post, online or by any other method.

What must an HFC tell you before and at sanction?

The full cost, in a language you understand. The HFC Directions say the company shall transparently disclose fees for processing, the amount refundable if the loan is not sanctioned or disbursed, prepayment options and charges, penal charges for delayed repayment, fixed to floating conversion charges, any interest reset clause and any other matter affecting the borrower, and must disclose the all in cost in a transparent manner.

The conduct Directions add that all communications to the borrower shall be in the vernacular language or a language understood by the borrower, that application forms should allow meaningful comparison with other lenders, and that acknowledgements should preferably state the time frame for disposing of the application. The sanction letter must convey the amount, terms and the annualised rate of interest and method of application, and the penalties for late repayment must be mentioned in bold in the loan agreement. Our guide to using the Key Facts Statement to compare offers shows where many of these numbers appear.

Why was your rate higher than the advertised one?

The answer should be on paper. The conduct Directions say the board of an NBFC shall adopt an interest rate model, and that the rate of interest, the approach for gradation of risk and the rationale for charging different rates to different categories of borrowers shall be disclosed in the application form and communicated explicitly in the sanction letter. They also say the rate must be an annualised rate, and that rates and the risk gradation approach shall be made available on the company's website or published in newspapers, and updated when rates change.

The HFC Directions separately say any advertisement that mentions an interest rate must also indicate whether other fees and charges apply and that full terms are available on request or on the website. If your sanctioned rate is above the headline rate, ask the HFC to point to the risk gradation that put you there.

How do your HFC rights compare at each stage?

The table brings the main rules together. The first two columns restate the Directions; the last three are buyer actions.

How does the 60 day exit work?

Paragraph 137 of the HFC Directions says HFCs shall give notice of any change in terms and conditions, and that if such change is to the disadvantage of the customer, he or she may within 60 days and without notice close the account or switch it without having to pay any extra charges or interest. The conduct Directions add that notice of changes, including disbursement schedule, interest rates, service charges and prepayment charges, shall be given in the vernacular or a language understood by the borrower, and that changes in rates and charges shall be effected only prospectively.

In practice, the window rewards borrowers who read their mail. Note the date of every change notice, decide quickly whether the change hurts you, and if it does, line up an alternative lender before the 60 days run out. The HFC Directions also say instalments collected from borrowers should clearly show the split between interest and principal, which helps you see the effect of any change on your statement. If a notice concerns penal charges, our explainer on how penal charges differ from penal interest covers the related RBI rules.

What about transfers, recalls and releasing your documents?

The conduct Directions cover the end of the relationship too. If you ask to transfer your loan account, for example to a bank offering a lower rate, the HFC's consent or objection shall be conveyed within 21 days from the date of receipt of the request, and the transfer shall follow transparent contractual terms in line with law. A decision to recall or accelerate payment shall be in line with the loan agreement, so the agreement's recall clause is worth reading before you sign.

When you repay in full, the Directions say the NBFC shall release all securities on repayment of all dues, subject to any legitimate right or lien for another claim, in which case you must be given notice with full particulars. They also say an NBFC shall release all original property documents and remove charges registered with any registry within 30 days after full repayment or settlement, and, where a delay is attributable to it, compensate the borrower at Rs 5,000 for each day of delay.

A seven-point checklist for Bengaluru HFC borrowers

1. Tell the HFC in writing which language you want communications in.
2. Keep the application acknowledgement and note any time frame it states.
3. Check that the sanction letter shows the annualised rate, its method of application and the risk gradation rationale.
4. Find the late payment penalties in bold in the loan agreement before you sign.
5. Read every change notice the day it arrives and record its date.
6. If a change hurts you, decide within the 60 day window whether to close or switch.
7. Check that each instalment on your statement shows the interest and principal split.

What if the HFC does not follow these rules?

Complain in writing first. The HFC Directions say an HFC shall endeavour to acknowledge a written complaint within a week, naming the official handling it, and to send a final response, or explain why it needs more time, within six weeks. They also require HFCs to display that if there is no response within a month, or the complainant is dissatisfied, the complaint can go to the National Housing Bank's complaint redressal cell.

Whether you are financing a flat in a Whitefield project such as Radiance in Hagadur or anywhere else in Bengaluru, the habit that protects you is the same: get every term in writing, in a language you read comfortably, and act on change notices within the time the rules allow.

Frequently asked questions

Can I leave my housing finance company if it changes terms against me?

RBI's Housing Finance Companies Directions, 2025 say that if a change in terms and conditions is to the customer's disadvantage, the customer may within 60 days and without notice close the account or switch it without having to pay any extra charges or interest.

Must an HFC explain why I was charged a higher rate than others?

The NBFC Responsible Business Conduct Directions, 2025, which list HFCs among the companies they apply to, say the rate of interest, the approach for gradation of risk and the rationale for charging different rates to different categories of borrowers shall be disclosed in the application form and communicated explicitly in the sanction letter.

Will my HFC communicate in Kannada if I ask?

The same conduct Directions say all communications to the borrower shall be in the vernacular language or a language as understood by the borrower, and that notices of changes in terms shall also be given in such a language. Tell the HFC in writing which language you understand best.

Does my HFC have to tell me why my loan was refused?

Yes. The Housing Finance Companies Directions, 2025 say that if the HFC cannot provide the loan to the customer, it shall communicate in writing the reason or reasons for rejection. Ask for that letter before you apply to another lender, so you know what to fix.

Last updated 2026-11-03. PropNewz Team.