Legal Question in Banking Law in India

07.02.2013

Dear Sir / Madam,

(Chinchwad East, Pune, Maharashtra)

1. The loan taken in 2000 ought to have been settled by 2004. As you say, so the concerned bank has immediately informed you in 2005 that the loan is still outstanding and uncleared. You ought to have persuaded your friend to have immediately cleared and settled the outstanding amount there and there, in 2005 itself.

2. Your guarantee to the bank is the net outstanding amount on the loan subject to a maximum upper limit of the original sum borrowed and nothing more. Ask for recovery proceedings initiated by the bank from the original borrower of the loan. The bank is required to first initiate recovery proceedings against the original borrower from the assets / securities pledged by him with the bank. The settlement amount has to be negotiated with the bank.

3. It is not the bank's concern whether the borrower or the guarantor have done well in business or not.

Regards,

FCA Prashant Chavan

Mumbai

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

The answer to your questions are here in below :-

1) NO.

2) YES.

3) Yes but you can challenge to take the limitation point .

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You need to take inspection of the papers from Bank, and explore the possibility of taking defense on the ground of Limitation.

you have to examine the papers from the bank with the help of a good lawyer and decide your defence. Generally as a guarantor you cannot escape liability.