liabilities of a guarantor under PMRY Loan Scheme
Querist :
Anonymous
(Querist) 22 July 2010
This query is : Resolved
One of my friends is a guarantor to loan taken under PMRY Loan scheme of SBI in 1995. The bank had not granted the full loan requested for and that sanction had given after hectic follow-up and other influences.
The purpose of the loan failed and the project could not be completed. Result, the loan could not be repaid. Now the bank is goving to file a suit against the borrower and the guarantor, my friend.
In the suit due amount, as per agreement, is mentioned is Rs.56,000/- and interest till date @ 15.5% is Rs.2,15,000/-.
The borrower is still unemployed and has no means of earning. My friend is a employee of private company.
In this case can suit be stand? If so, what would be the liabilities of my friend.
s.subramanian
(Expert) 22 July 2010
the liability of your friend is absolute and joint and several as that of the borrower.
Devajyoti Barman
(Expert) 22 July 2010
The liability of the guarantor comes into play only after the bank exhausts all options against the borrower and in this case the guarantor has every right to get himself deleted from the suit.
Chanchal Nag Chowdhury
(Expert) 24 July 2010
The view of Mr. Subramaniam is the latest position in law. In fact, Bank can get hold of the guarantor even without the borrower.
The liabilities of your friend is absolute & co- extensive with that of the borrower.
Advise: Get the loan to be declared a Non-performing Asset. This will help to reduce your interest burden.
Querist :
Anonymous
(Querist) 26 July 2010
I have come to know that, as per Govt. PMRY Scheme the Bank cannnot insist for a guarantor. The branch manager compelled my friend to be a gurantor to the loan.
I also come to know that, by this time bank might have written off the account. If so, where the case stands. Can my friend be relieved from the case as being forced guarantor.
Parthasarathi Loganathan
(Expert) 29 August 2010
Once the guarantee document is executed by the guarantor, there is no question of claiming it as a forced one unless a bonafide intimation is sent to the Head Office the bank. However, I disagree with Mr.Chowdhury on NPA context. Just because a loan is declared as NPA by the bank (as it is purely stipulated based on prudential accounting norms) neither borrower nor guarantor can disown their repayment obligations to the bank.
