The full form of MOD in banking is Memorandum of Deposit. It is a legal document commonly used in the context of home loans or fixed deposits, depending on the banking situation. For home loans, MOD signifies an agreement where property documents are deposited with the bank as security for the loan. In fixed deposit scenarios, it details the terms and conditions agreed upon by the bank and the depositor.
MOD in Home Loans
In home loans, MOD is executed when a borrower pledges their property as collateral. It officially documents the deposit of property papers with the bank to secure the loan. The bank retains these documents until the loan is fully repaid. Borrowers need to pay stamp duty for registering the MOD, the rates of which vary across states in India.
MOD in Fixed Deposits
In the context of fixed deposits, MOD outlines the agreed terms, such as the deposit amount, tenure, interest rate, and maturity details. This ensures transparency and serves as a formal record between the bank and the depositor.
Key Features of MOD
- Legal Security: It protects the bank’s interest in case of loan defaults or disputes.
- Transparency: Clearly defines the obligations of both parties, whether in loan agreements or deposits.
- Stamp Duty: Applicable in cases of property-related MODs.