Education Loan
Aveek Bhowmik
(Querist) 17 March 2011
This query is : Resolved
I am facing a problem for which I need your valuable suggestions. I have taken an educational loan from UCO bank(Ganesh Chandra Avenue branch, Kolkata)back in 2006 with an interest rate of 11% per annum, to pursue Post Graduate Diploma In Public System Management(transportation and logistics) from IISWBM(Indian Institute of Social Welfare and Business Management). The total amount of loan sanctioned was Rs. 1,16,000(One lakh sixty thousand only). But only Rs. 67,000(sixty seven thousand) was disbursed as the fee for the first year. Rest amount i.e. Rs. 49,000(forty-nine thousand) was to be disbursed only after production of documents confirming my promotion to the second year of the course. But due to prolonged illness I could not complete the course. Actually I could not complete even the first semester. I have never applied for the rest amount. While sanctioning the loan the bank almost forced me to produce a collateral security of Rs. 1,20,000 which was a LIC policy. I had to take the policy from them before any paperwork was done. But according to UCO bank site no security should be taken for educational loan up to Rs. 3,00,000. But I was told if I do not take the policy I wont get the loan. However, on July 2008 I informed the bank about my inability to complete the course and requested them to revise the EMI as entire loan amount has not been disbursed. I received no reply from them. Till date I have not paid anything to them. This letter was sent by ordinary post. On July 2010 I have received a letter from the branch stating to meet them. On December 2010 I have sent another mail, this time by speed post to requesting review the EMI amount and provide me some more time to start repaying the loan as still I am unemployed. On February 2011 I have received a demand notice containing ha huge amount calculated on the basis of Rs 1,16,000. Within a couple of days I got a call from the branch manager; when I told him my status he denied to get any letter from me what so ever. He also told me it is not his duty to take care who is writing what as has got other things to do. One week later he called me again, and suggested not to contact any lawyer. Hi=e suggested to settle the thing by paying an amount which would be fixed after a meeting. But this time also he was calculating everything on the sanctioned loan amount. Both the time he repeatedly told me to avoid court. But after the second call I told the incident to one of my friend who is an advocate. He drafted a letter stating my problems and send it by registered post with ad. Last Sunday(13.03.2011) evening three men came to my flat. One of them introduced himself as the branch manager; and other two were ‘recovery agents’(according to the manager). The first thing branch manager said to me was why I have consulted a lawyer and sends a legal notice instead of writing it myself. It seemed by doing this I have committed some crime an he is doing the right thing by bringing musclemen (so-called recovery agent) instead of replying the advocate’s letter. He threatened me if I do not pay the pending EMIs which are calculated on sanctioned amount the recovery agents would pressurize me to do so. When I reminded him about the disbursed amount, he told me first I will have to pay the pending then it would be considered. It sounded baseless. But what irritated me is that his threatening along with the two recovery agents. He constantly asked me why I send an advocate’s letter. However, I informed this to my advocate. He suggested me if these recovery agents comes once more, I should report the local PS. If I could take a photo or record the conversation it will be better. He also suggested me to go for a caveat and then for an injunction. Kindly provide me if you have any further suggestion. I want to get rid of this as early as possible. Is there any way to settle by paying half of the disbursed amount (i.e. 33,500)? Please help me.
malipeddi jaggarao
(Expert) 18 March 2011
Mr.Bhowmik, One thing you should understand that the Bank has helped you by providing education loan. LIC policy is not a collateral security. You are misconception. It is a new policy obtained while sanctioning the education loan to cover your life risk, so that in case of any untoward incident, the legal heirs will not be loaded with the burden of repayment of education loan and this policy takes care of repayment and the residual will be given to the legal heirs.
You have been an amount of Rs.67000 in 2006 with 11% interest and you have not repaid anything till now. Since your loan account become NPA, the Bank might have charged compounding rate of interest in which case the would have become more or less double by this time. Bank can never include the undisbursed amount in the overdues. It is only your presumption.
Next thing is, you have genuine reasons for not completing the course. Why could you not go to the Bank and explain them at that time your position and ask for solution? All the while you were avoiding direct contact with them. Yes, there is a provision that EMI is to be revised in genuine cases, but you have never seriously attempted in this direction. Instead you initiated legal battle.
The Branch Manager rightly advised you to pay some overdue amount and come for negotation. You have not hinted about the financial means of the family. Bank Manager has to visit the customer's place if the customer is not cooperative and avoiding to come to the Bank. He will not come singly as it gives scope for allegations. They have to recover the amount which is public money by means.
According to me even now, I advice you to establish good liason with the Bank Manager by repaying whatever is possible. Fix a date and have a discussion with him producing all documentary evidence showing the reasons for non-completion of course, non-payment of overdues. You go with a firm plan about repayment and have a dcissuion. Alternatively you tell the Branch Manager that you wish to repay the dues under one time settlement. You can always obtain a statement of account of your loan account for verification whether the undisbursed amount is included in the loan dues. Some times it so happens, though it is not correct, bank disburses full amount and keep the next year fee amount in your own Savings Bank Account. You can also verify this angle and if it is so, you can ask the bank to credit back the difference in the interest and transfer this amount to your loan account. (This type of possibility is very rare). Since it is the March month, the Bank will be aggressive in recovering the overdues. Hence you go to the Bank and pay whatever is possible and initiate discussion, if not right now, after March, after having a word with the Bank Manager.
I wish you all the best.
Guest
(Expert) 18 March 2011
i agree with the expert.
Aveek Bhowmik
(Querist) 19 March 2011
first I would like to thank you for your valuable suggestion.But sir it is not my presumption that bank has included undisbursed amount. The EMI calculated while sanctioning the loan was Rs. 2523/p.m. and the demand notice says just that thing(this time it is Rs. 2500/ instead of Rs. 2523). At 11% rate of interest EMI for Rs. 67,000/ could never be Rs. 2500/. Another thing , bringing in witness is a totaly different thing. he could have brought any bank employee with him; instead he has brought some musclemen. engaging of musclemen in the name of recovery agent is illigal according to Madras high Court and honourable Supreme Court. And also in my first letter I have informed every details to the bank and seek their suggestion. They remained silent. Now it seemes to me that tehy were waiting to make the amount too high and then to make move to recover it by using musclemen. Otherwise there could not be any reason behind their silence in the past. Till date they have not answared me in written for a single time.
