Legal Question in Banking Law in India

I have a study loan Rs1,90,000 taken in 2001 from SBI with security of a land. Due to family problem I couldnot pay the amount. Few days back manager visited my house and told the amount is Rs2,32,000. Than one latter came from bank demanding the amount of Rs3,84,257 . In the reply I send one letter requesting for OTS . Than the bank send a letter mentioned as follows:"The amount Rs232000 told by our manager was balance outstanding in your loan a/c with interest charged up to 30.05.2005 which stood at Rs231480 and was arived after appropriation of all yr repayment since inception of loan and upto 01/02/2007 which counts to Rs38200. As yr a/c has been turned into NPA the interest from 01/06/2005 has not been added to the outstanding(As per RBI guidelines) but you are liable to pay the interest on outstanding in yr account till final payment is made by you.The current demand of Rs384257 as on 24/06/2010 is the sum total of outstanding plus unapplied notional interest from 01/06/2005."

So I am confused if it is NPA how the bank calculating interest and saying there is no possibilities of any settlement. Please help me what should I now?

Thanks,

Aruni Panda


Asked on 7/07/10, 12:13 pm

1 Answer from Attorneys
J. Radhakrishnan independent Practice

Classification of the account after default occurred for six months as NPA will stop adding interest thereafter in the live account. That does not mean the interest won't accrue on the balance outstanding which will be debited to the balance transferred to advances under collection account. Thus the amount claimed by SBI is payable by you. You may appeal to the chairman of the Bank to provide for one time settlement. If they don't want negotiation, then the Bank will file suit. In the court, you can contest any unauthorized debit as well as excess rate of interest and request that the matter may be referred to Lok Adalat. There you can try to arrive at a settlement, which if failed will have the consequence of your being made liable to pay the amount decreed in the suit. This is the grim reality and you will have to face it.

Read more
Answered on 7/07/10, 6:56 pm


Related Questions & Answers

More Banking Law questions and answers in India