My bank is asking for blank cheque for home loan. Is this correct?
Earlier it was common practice for banks to ask for blank cheques. Now, banks insist on post-dated cheques that are equal to the principal amount that you have borrowed. This is done for security reasons. In case you fail to pay your EMIs through auto debit, they will have a way of recovering the amount. Handing out blank cheques is not very safe. Inform your bank that there are other banks who insist on only post-dated cheques for security purposes and not blank cheques. Check with them to see why they need it and how they will ensure its safety.
In case they don’t agree, ensure that the cheques are returned to you after the loan is repaid. You can also consider stop payment for those cheques.
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