You paid off the loan. Why is the EMI still being deducted?

Kavya, 28, is a nurse at a private hospital in Bengaluru. She took a ₹40,000 personal loan in August, paid every EMI on time for 12 months, and received a loan closure confirmation from the app in August of the following year.

In September, ₹3,400 was auto-debited from her salary account. Her loan was closed. The money was gone.

She messaged customer care. They said it was a "system error" and would be resolved. In October, another ₹3,400 was debited. And in November.

By the time Kavya realised this was not a minor error and that she needed to act, she had lost ₹10,200 to a loan that no longer existed.

This is a NACH mandate problem — and it is far more common than you think.

What Is NACH and Why Does It Control Your Account?

NACH (National Automated Clearing House) is a payment system run by NPCI (National Payments Corporation of India) that allows lenders to automatically debit your bank account on a fixed schedule.

When you take a loan, you authorise a NACH mandate — essentially a standing instruction from your bank to the lender, permitting them to deduct your EMI on a specific date each month, for the specified loan tenure plus a buffer period.

The problem: When your loan is closed, the lender's system is supposed to cancel the NACH mandate with your bank. If this cancellation does not happen — due to a system error, administrative oversight, or deliberate delay — your bank continues honouring the debit instruction. Your bank does not know the loan is closed. It just sees an active NACH mandate and executes it.

Why This Happens More Than It Should

Several factors make post-closure NACH debits common:

System integration failures: Many fintech lenders use third-party payment processors for NACH. When a loan is marked closed in the lender's system, the cancellation instruction sometimes fails to reach the NACH processor.

Buffer period exploitation: NACH mandates are often set up with a tenure slightly longer than the loan (e.g., 14 months for a 12-month loan) to handle potential delays. If the cancellation is not filed, these buffer months become unauthorized debits.

Deliberate delay: In some cases — particularly with less regulated lenders — the system "error" is not accidental. Post-closure debits are a revenue stream that exploits borrowers who do not monitor their accounts carefully.

Your Immediate Action Plan (Step by Step)

Step 1: Confirm Your Loan Is Actually Closed

Before escalating, verify your loan status in the app and request a written loan closure certificate (also called NOC — No Objection Certificate). A closed loan must have a written closure certificate.

Step 2: Document Every Unauthorised Debit

Gather your bank statement showing every post-closure debit. Screenshot the loan closure confirmation in the app. These two documents are your evidence.

Step 3: Freeze the NACH Mandate at Your Bank

You do not need the lender's cooperation for this. Walk into your bank or use netbanking and: Go to: Payments > NACH Mandates > Active Mandates Find the mandate linked to your lender Deactivate or cancel it

This stops future debits immediately. Your bank cannot refuse this request — you have the absolute right to cancel a NACH mandate.

Note: If the bank says you need lender permission to cancel, this is incorrect. Under NPCI rules, you can cancel your NACH mandate independently. Escalate to the bank's Nodal Officer if needed.

Step 4: Demand Refund from the Lender

Send a formal written complaint (email or in-app message):

"My loan account [NUMBER] was closed on [DATE] and I received closure confirmation. Despite this, EMI auto-debits of ₹[AMOUNT] have been made on [DATES]. This is an unauthorised debit of money from a closed loan account. I demand immediate refund of ₹[TOTAL AMOUNT] within 7 working days. I am simultaneously notifying my bank to cancel the NACH mandate."

Step 5: Escalate to Nodal Officer if No Response in 7 Days

Every RBI-regulated lender must have a Nodal Officer. Their contact must be on the lender's website. Send your complaint with all evidence.

Step 6: File with the RBI Ombudsman if Still Unresolved

If the lender does not resolve within 30 days, file at cms.rbi.org.in. This is free, binding, and can award compensation beyond the refund amount.

Your Legal Rights

Payment and Settlement Systems Act 2007: Governs NACH. Unauthorised debits violate this act.

Consumer Protection Act 2019: Post-closure debit is "deficiency in service" and "unfair trade practice" — actionable in Consumer Forum.

RBI Digital Lending Guidelines 2022: Require clear loan closure process and return of any security.

How to Get Your NOC (No Objection Certificate)

Once your loan is closed, demand a NOC in writing. This should include: Loan account number Original loan amount and tenure Date of full repayment Statement that there are no outstanding dues Lender's stamp and authorised signature

Keep this forever. For secured loans (property, vehicle), the NOC is needed to clear the lien on your asset. For unsecured loans, it is still important for CIBIL — your credit report should show "Closed" not "Open."

If the lender does not provide NOC within 30 days of loan closure, file a complaint. RBI Ombudsman has ordered lenders to pay compensation specifically for NOC delays.

Kavya's Resolution

Kavya cancelled the NACH mandate at her bank (which stopped the debits immediately), then filed with the RBI Ombudsman.

The Ombudsman ordered the lender to refund all three unauthorised debits (₹10,200) plus pay ₹15,000 in compensation for harassessment and financial loss.

Total recovered: ₹25,200. Time invested: about 3 hours across the entire process.

If post-closure EMI debits have happened to you, HeyZ AI can draft your complaint to the lender and RBI Ombudsman — free, at www.sahisujhav.com

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• Your rights under DPDP Act 2023
• Cancel a loan inside the 3-day cooling-off
• RBI Ombudsman vs internal complaint