Query


Dear Sir,

I had taken an overdraft facility from a local bank in East UP in January 2005 on security of LIC Policy. After September 2006 no transaction took place in that account except a payment on 08/10/2007. Business itself has been closed in 2006. I continued to pay premium on LIC. Bank has not categorized this account as NPA.  Till date I have received three Notices from bank requesting to renew the account but I never replied. In meantime I approached to bank to settle the account but bank has refused it. On 03/04/2010 bank has directly received a cheque from LIC on mortgaged policy without my knowledge.

Now I wanted to know whether bank has any right to enforce the payment. Is it a time barred debt now? What are the remedies available to me? Can I recover my LIC Policy back? What actions bank can take?

 

Please suggest me about my queries.

 

Regards,

Manoj

 
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Advocate

At the time of issuing overdraft the bank would have obtained your blanket approval for adjusting the proceeds of the LIC policy on maturity for the outstanding against the overdraft.If at all the maturity amount is higher than the outstanding in the overdraft account, the balance would be returned, or else initiate action for the recovery of the remaining balance.Contact the bank for the details of the amount credited towards the overdraft.


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Dear Sir,

 

Thanks for your reply.

 

Please give your suggestions on following queries:

 

Whether it is necessary for bank to treat this account as NPA or not since limitation as per NPA Norms has been expired and whether payment of LIC premium by me would make any difference in this regard?

As I know period of limitation is three years which will be expired on 8/10/2010, in this case I want to know, payment by LIC directly to the bank has created any enforceable right (from the date of payment) to  bank ?

Bank has requested to renew the account, is it necessary to renew this type of account as more than 5 years have passed whether it would give nay benefit to me. 

 

 

 

Regards,

Manoj

 
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