Legal Question in Banking Law in India

I availed an Education Loan from a nationalized bank in India in 2006 for my Engineering studies. It was disbursed in parts each year and my father managed to pay the accrued interest from 2006 until 2009 (course period). When I got a job in Jan 2010, I informed the bank to start the repayment and accordingly started paying the EMI from 2010 to 2014. Now the problem is, the bank recently contacted us about an outstanding amount against this loan. According to them, the repayment I did, only included the principal amount and not the interest. Our understanding was, the interest was serviced before the commencement of repayment and thus EMI was fixed based on principle amount only. Now all of a sudden they are expecting us to pay the interest not only for repayment period but also for the years after that until today! (which btw is half the original loan amount).

This is the only loan me and my family has ever availed so we weren't really sure about the formalities or legalities. During repayment we just informed the bank and accordingly started paying the EMI they asked for until the tenure they told us about. We didn't take any clearance certificate when repayment was completed. Questions-

1. What are my options? We are still gathering information about the amount my father paid which is 10-12 yrs back, to figure out if it was complete interest or interest for course period only.

2. In case our only option is to pay the outstanding interest, can we avail a waiver for period after repayment? Because the EMI stopped in 2014 without any communication between the bank and us. So we didn't even know about the balance amount until they contacted us recently.

Please advice.

Thanks,

Priyanka


Asked on 7/31/18, 11:30 am

1 Answer from Attorneys
Shaji Natarajan Salam Advocates & Legal Consultants

Hi Priyanka,

You have not mentioned the Bank from which you had availed the said Education loan. If its a Public Sector Bank, you may first approach the concerned Branch for a detailed Statement of Accounts and then analyse the correct amount you are to make payment. In case of dispute, approach the Regional Office or Zonal Office of the Bank for settling the issue and you can ask for waiver of atleast a portion of the interest, which may include penal charges also.

If proper information is not forthcoming from the Branch, you can seek for required information, by filing Application, under the Right to Information Act.

If the Bank authorities are unwilling to settle the matter amicably or keep delaying the matter, you may approach the jurisdictional Banking Ombudsman.

If you require further clarifications, you may mail your queries to [email protected]

Best Regards,

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Answered on 7/31/18, 11:27 pm


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