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How much cash allowed to loan prepayment to bank

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Kuldeep Singh

233 Points Posted on 17 December 2025

How much cash amount allowed to loan prepayment/foreclosure in respect of bank processing. I have home loan and my outstanding/due amount is 15 lakh. Now I want to permanently close my loan by cash paying Rs 15 lakhs at once to the punjab national bank.

I read somewhere that

> To government or banking company there is no limit and exempt from section 269SS/269ST

> To NBFC/HFC, there is limit of less than 2 lakh under section 269ST

Replies (2)

Quick Summary

This discussion clarifies that legally, paying Rs. 15 lakhs in cash to Punjab National Bank for a home loan prepayment is permissible under Section 269ST, as banks are exempt. However, practically, the bank may refuse the cash payment due to RBI's Anti-Money Laundering (AML) and Know Your Customer (KYC) norms, likely preferring a non-cash transfer method.

Rama chary Rachakonda

Master in Accounts & high court Advocate

7021 Points Posted on 17 December 2025

Section 269ST meaning you should make payments below 2 lakhs or use non-cash modes for amounts of 2 lakhs or more. So you can make the full Rs.15 lakhs cash payment for prepayment/foreclosure without breaching Section 269SS/269ST, as the exemption applies to banks.

Ryan Vaz

VR4U

138 Points Posted on 30 December 2025

Legally, cash payment of ₹15 lakh to Punjab National Bank (a banking company) does NOT violate section 269ST, because banks are expressly exempt under the proviso to section 269ST.
Section 269SS is also not applicable, since you are repaying a loan, not accepting one.

Practically, however, PNB is very unlikely to accept ₹15 lakh in cash due to RBI AML/KYC norms and internal bank policies, and may insist on account-payee transfer instead.