Legal Question in Banking Law in India

Home loan guarantee - withdrawal

Sirs, I have given a guarantee for a Home Loan. After 2 years, the borrower's payment track is poor with a days past due of more than 30 days. Borrower's overdue is reflecting in my CIBIL account also. Borrower is not cooperating in paying the dues on time, even after repeated reminders from my side. Borrower is traceable.

1. Can I sue the borrower?

2. Can I request the bank to withdraw the guarantee?

3. CIBIL overdue status - not allowing me to get any loans. Can i sue the borrower for my opportunity loss.

Clarify banking laws with respect to these queries


Asked on 5/15/09, 1:45 am

3 Answers from Attorneys
J. Radhakrishnan independent Practice

Re: Home loan guarantee - withdrawal

Once the home loan already disbursed to the borrower has been guaranteed by you, you are as much liable as the borrower. Do not have illusions that your liability is secondary to the borrower. If the borrower defaults, only way you can get reimbursed by the borrower is for yourself to pay the loan amount and get subrogated to the Bank's rights over the borrower and then if he does not reimburse you, you can sue him and enforce the mortgage. Unless and until you repay the loan, you have no right to sue the borrower. There is no question of your now withdrawing from the guarantee. Unless and until the loan is repaid either by you or the borrower you will figure in the CIBIL default list.

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Answered on 5/15/09, 11:36 pm
Sudershan Goel India Law Offices of Sudershan Goel - Advocate

Re: Home loan guarantee - withdrawal

Yes, you may sue the borrower for the losses being suffered by you and may insist upon him to clear the loan or facilitate withdrawal of your guarantee.

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Answered on 5/15/09, 4:56 am
Pranav Desai PD Legal & Associates

Re: Home loan guarantee - withdrawal

You can withdraw the guarantee only for the future loan/installment. However, in respect of the overdue installments you would be liable.

Further, I do not understand on what grounds you will sue the borrower because you have legally signed an agreement with the bank and stood as a guarantor for the borrower.

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Answered on 5/15/09, 5:26 am


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