Legal Question in Banking Law in India

we have a consortium banking 1. nationalised bank (lead bank) 2. co operative bank and account has gone NPA. there is pari passu charge on assets and directors personal gurantee.

both banks have file a case in 2 different courts . nationalised bank in DRT . and co operative bank in co operative socities court . both for there respective share of amount only. say any recovery happens by asset sale . 1.will the amounts be shared? 2. i have given a pari passu charge so can one bank can sell the asset alone 3. as a lead banker how it is preveliged and what are its rights ?


Asked on 10/27/12, 7:33 am

1 Answer from Attorneys
Fca Prashant Chavan Expert Edge LLP

28.10.2012

Dear Sir / Madam,

In a consortium, when it comes to liquidation of the organization in question, both banks have an equal right to acquire and dispose all the assets of the Company including the assets pledged by the Directors to the banks at the time of obtaining finance.

So, to answer your queries :

1. Yes, the amount realized will be shared by both the banks in proportion to their lending;

2. In case the other bank agrees to the arrangement, one bank can alone sell all the acquired assets;

3. The lead banker has a first right or priority in the consortium.

Regards,

FCA Prashant Chavan

Mumbai

(You can also mail me for any further on-line advice at [email protected])

Read more
Answered on 10/28/12, 7:50 am


Related Questions & Answers

More Banking Law questions and answers in India