Legal Question in Banking Law in India

I have taken a Education Loan of Rs 5.5 lacs for pursuing MBA (2006-2008) in India from a Nationlised Bank of India. My father is a co-borrower and guarantor in the loan. The loan was disbursed in Instalments and was unsecured without any collateral.I have repaid Rs 1 lacs to the bank till July 2009. In september 2009, I lost by job due to recession.Till December I kept on paying/ serving the interest part. I have asked the bank for a EMI holiday of 6 months, but was not able to get any employment. Now the bank have asked me to pay a overdue of Rs 85000/-.Now from the last 6 months, i have not paid any EMI (RS 14000/MONTH for 5 years).I am not able to repay my education loan. The total outstanding amount is Rs 6.8 lacs. Bank has send me a recovery notice and threatened for legal action very soon.-. I am pennyless at this moment and my financial postion is such, that I am not able to maintain the minimum AQB in my savings account. My question is;
1. What legal options are available to me ?
2. What penalty can be imposed in case I am unable to serve for some more period?
3. What can i do to safeguard my postion?
4. Can I request any competent authority for a interest waiver or some relaxation of more time.
Please advice.
Sagar

Asked on 7/12/10, 5:31 am

2 Answers from Attorneys

ranju A K

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Since you have not dispute regarding the borrowing and your liablity, the only option before you it to approach the bank for a settlement or take some time for repayment. The Bank as such is not legally bound to give you time. However considering your situation, the Bank could consider your request. It is better to settle your liability as early as possible as the interest on the loans would keep on mounting, which would become additional burden to you.

Answered on 7/12/10, 7:28 am

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