Reg: collateral security
Vamsi Krishna
(Querist) 01 July 2015
This query is : Resolved
Greetings of the Day!!
We are running a Ltd company and for business purpose taken loan from a nationalized bank with the Collateral security of land.
Land is located just adjacent to Resident Colony and is within 8 Kms of Municipality. The land is vacant and not used for any agricultural purpose for last 6 years.
At the time of purchase it was registered as Agricultural land. Now the bank people asking for conversion of land as Non agricultural land. Is conversation is required ?
Thanks in advance.
Guest
(Expert) 01 July 2015
What is the text of bank's letter and reason quoted for conversion, if they have written you any letter for conversion of land?
Vamsi Krishna
(Querist) 01 July 2015
Hi Sir,
Thank for the reply.
They mentioned this in their Sanction order as "The Company shall submit conversation of land certificate as non-agriculture to our office in respect of land EMG with our Bank"
Guest
(Expert) 01 July 2015
You have not mentioned if any reason for conversion was quoted by the bank. If not mentioned, ask the bank to quote reason for asking such conversion, You have also not stated, what objection you have in conversion of land.
Vamsi Krishna
(Querist) 01 July 2015
Sir,
They mentioned that point in the renewal of sanction order.
We have a problem to convert is charges are taking lakhs rupees. That's the only problem.
Is it mandatory to change the conversion because it situated in city limits and no agricultural business is running there.
Thank you.
Guest
(Expert) 01 July 2015
Mr./Ms. Krishna,
Your query was merely an academic query without the basic fact of renewal of sanction.
Anyway, since it is a question of renewal of sanction, you have no option other than complying with their instructions. Otherwise, you will have to repay the amount of debt to avoid auction of land in the absence of renewal of sanction. Had there not been the case of renewal of sanction, the bank was not justified to ask for the change of legal status of the collateral security.
Rajendra K Goyal
(Expert) 02 July 2015
Try with some other Bank for switch over.
