Legal Question in Banking Law in India

Dear Sir,

I am having a Trading Business and started a C/C limit of Rs 50 lakh with IOB (Indian Overseas Bank) in the year 2003 which was further increased to Rs 75 Lakhs in year 2004 with starting a new project of Manufacturing Plant by taking a loan of Rs 15 Lakhs C/C Limit and RS 25 Lakhs Term Loan

The business kept growing and by 2006 the bank limit also increased to Rs 2.20 Crore. We had also increased the turnover by this time but then after two years due to the labour problem and sudden rate increase and shortage of raw material led to the closure of Manufacturing Plant . Inspite of this big problem we did return Rs 25 Lakh term loan to the Bank.

Further, since last year due to the Dollar Fluctuation our suppliers beared great losses and thereby the supply of raw material to us was completely stopped and the Dollar Fluctuation also affected our business as we were also importing few things.

Due to all this our business beared the loss for approx Rs 80lakh, but still we have been paying the bank interest for approx Rs 45 Lakh without doing any business and the only person who has been helping me financially is my brother who is settled abroad. He has been sending me Rs 3 Lakh every month.

But now my Plan is to again improve the financial position of my firm with the help of my brother�s money (Rs 3 Lakh) and some new suppliers who are really to do further business with me in order to recover from my losses from the last few years and I have been trying to start my efforts towards this .

I would request the bank to grant me relieve with any further trading and charging interest for 1-2 years so that I would be able to perform the business further as my finances are being consumed in paying the Bank Interest .

Could you please suggest any way out of this situation as the Bank Manager is pressurizing us to pay the bank first one else they would make our firm NP.

Looking forward to hear from your assistance.

Thanks and Regards

Rakesh


Asked on 5/29/10, 8:57 pm

3 Answers from Attorneys
RAJIV GUPTA (Cell: +91 9811284735) [email protected]

in such a situation, a lawyer can only help you when the bank starts recovery process against your firm and before that it is you only who needs to negotiation your terms with the bank.

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Answered on 5/31/10, 1:16 am
Sudershan Goel India Law Offices of Sudershan Goel - Advocate

You may seek "Bridge Loan" from the Bank to cover the interest amount for 1 - 2 years as per your needs and continue operating the CC Limit Account regularly as per banking law and practice.

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Answered on 6/01/10, 5:21 am
Sudershan Goel India Law Offices of Sudershan Goel - Advocate

Since your brother is settled abroad and he is helping you, try to seek E.C.B. that may also reduce your interest burden for all times.

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Answered on 6/01/10, 5:22 am


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