Co operative bank case
Querist :
Anonymous
(Querist) 17 June 2011
This query is : Resolved
From
Prakash.L
572,6th Main, 6th Cross
P.J Extension
Davangere
Karnataka
Email: prakashbmw123@gmail.com
M-09844488854, 9448112297
Dear Sir
We are having Overdraft Account with SKP Co-operative Bank, since from 10 years. We availed 26 lakhs loan by giving Collateral Security of our 1 residential House and 1 Commercial building. Due to heavy losses in our business we could not able to pay interest regularly but it came to NPA finally. From their banker started charging compound interest basis now it came to around 50 lakhs. Now banker went to DRCS Court from past one and half years.
In our agreement it has been agreed to pay 13% Interest and 2% panel interest. But they are charging 15% in total to our principle loan plus compound interest
In our agreement no where it is mentioned about compound interest clause
Due to heavy loss we don’t have money to pay accordingly to the bankers demand.
So I request you to please guide us with winning legal points to come out of this crisis.
If possible please provide your email id and contact details so it may more easy
PALNITKAR V.V.
(Expert) 18 June 2011
Instead of using the term compound interest, the banks use the term "Rest" e.g. quarterly rest, half yearly rest and the like. Ultimately, it means compound interest, if interest is not paid according to the Rest. So pls check it.
malipeddi jaggarao
(Expert) 18 June 2011
For overdraft account, normally bank charge interest on quarterly rests. According to the practice, the quarterly compounding is correct. It is too late to find out a solution out of court. You should have contacted the Bank officials and brought your financial position. Banks will not go to courts without exhausting all other remedies. Even now also you can contact the bank officials and offer a workable compromise proposal wherein Banks do agree some times to sacrifice certain portion of interest especially after the date the account became NPA, because though sufficient securities are available, it will take time to realize them through court for recovering the dues. Hence, it is better to have a dialogue with the Bank officials and try to have a compromise deal. Generally the Banks will agree if the defaulter deposits a upfront deposit in a separate account till the compromise is approved. Alternatively, if your financial position is so bad that you could not even go for a compromise, if the properties have more worth than the debt, you can seek approval from the Bank for disposing off some properties (though they are under mortgage) with the consent and help of the Bank, and wipe-off your debt. At least you can save the remaining properties and sale through your intervention with the Bank's consent may fetch better rate than the Court intervention.
prabhakar singh
(Expert) 18 June 2011
I SHARE WITH THE OPINION EXPRESSED BY Mr.Malipeddi Jaggarao ,AS THAT MUCH IS THE ONLY COURSE OPEN NOW. NEGOTIATION WITH BANK MANAGEMENT,PRESIDENT etc., TO MAKE THEM AGREE FOR A SUITABLE AND AFFORDABLE COMPROMISE.
YOU HAVE MISUNDERSTOOD THE INTEREST CLAUSE IN THE AGREEMENT.THEY WOULD HAVE CHARGED @15%PER QUARTER INTEREST DUE TO YOUR DEFAULT IN PAYING THE INSTALLMENT DUE @13%.THE INTEREST CLAUSE IN AGREEMENT THAT YOU REFER, WOULD ALWAYS WORK AS COMPOUNDING @15%IN DEFAULT CASES.
AT D.R.T .YOU ARE NOT GOING TO HAVE SOME HEAVEN AND SARFACIA IS ANOTHER HURDLE IF YOU MAKE YOUR BANKER ANGRY,THE WOULD LIKE TO PROCEED FIRST AGAINST MORTGAGED PROPERTY BY THEIR OWN AUCTION,IF ANY RESIDUE LEFT,THEY WILL PROCEED TO D.R.T.,THEN.
SO IN OVERALL ASSESSMENT, NEGOTIATING FOR A SUITABLE COMPROMISE IS THE ONLY BEST COURSE OPEN IN BANK LOAN CASES,SINCE THE LAW PROTECTS THEM AS THEY HAVE PUBLIC DEPOSITS IN THEIR HANDS WHICH THEY LEND AND DO BUSINESS ON THE SPREAD OF INTEREST.
