SRFAESI ACT DOUBTS
shanmuga kumar b
(Querist) 31 January 2011
This query is : Resolved
Dear sir,
I am a gurantor of a cash credit loan of rs. 8.5 lacs of M/s. Raj Enterprises (Borrower) with United Bank of India. The Borrower is not paid the interest from 30.6.2008 till date. Bank is not declard the account as NPA till 30.6.2010. They decalred as NPA on 30.6.2010, and demanded to pay principle + interest of Rs. 12.25 lacs. Borrower is lost all his money in business and not wilful defaluter. I have to settled the money. Bankers issue notice as per SRFAESI rules. As a gurantor, I am ready to pay around 7 lacs to bank. As per RBI guidelins NPA account will be charged simple interest of 6 % of ledger amount till date of settlement. Ledger balance is 9.01 lacs on 30.6.2008 i.e. come around 9.95 lacs. but bank demanded 12.25 lacs. I want bank to sacrifice some amount. What can i do? whom i contact for sacrfice and One time settlement? pls advice
DEFENSE ADVOCATE.-firmaction@g
(Expert) 31 January 2011
Very good that you are ready to pay. You can buy time by legal actions against the lender and they will settle even for less than you want to pay.
Guest
(Expert) 31 January 2011
KINDLY NOTE THAT YOU MAY APPROACH DEBTS RECOVERY TRIBUNAL AND FILE AN APPLICATION AND STRONGLY OPPOSE THE CLAIM OF THE BANK.
YOU MAY DEFEND YOUR POSITION AS BANK SHOULD FIRST TRY TO RECOVER FROM THE ORIGINAL BORROWER. THEN AS PER ADDITIONAL GUARANTOR YOUR LIABILITY SHOULD BE LIMITED TO PROMISORY NOTE AND MORTGAGE OF YOUR PROPERTY AMOUNT CONCERNED.
YOU CAN APPEAL TO DEBTS RECOVERY APPELLATE TRIBUNAL AND EVEN TO HIGH COURT.
KINDLY NOTE THAT ONCE YOU PAY THE AMOUNT BANK WILL AGAIN DEMAND THE BALANCE AMOUNT ALSO HENCE IT IS ALWAYS BETTER TO SETTLE THE LOAN MATTERS IN COURT SO THAT COURT WILL EVEN REDUCE RATE OF INTEREST AND EVEN LONG TERM INSTALMENTS CAN BE PRAYED.GOOD LUCK.
J. P. Shah
(Expert) 31 January 2011
If you want to pay the amount determined by you, you may write your consent and preparedness to zonal or regional office of the bank with copy to Recovery Dept of HO and branch. You can have details from website of the bank. Please seek appointment for discussion at Regional/Zonal Office. Bank will definitely bargain and try to extract maximum amount through delay and pressure, but with your firm standing you can negotiate at or around minimum that bank has to recover as per RBI OTS formula. If bank does not agree to your amount, you can file application with DRT for compromise with intervention of DRT. As per National Litigation Policy of Central Govt effective from 01-07-2010, banks are also not interested in fighting legal battles, but to recover out side courts/tribunals. Hence make concerted efforts for a compromise and account will be settled.
malipeddi jaggarao
(Expert) 03 February 2011
I do not agree withMr.Nandakumar that the Bank should first try to recover from the Original borrower. Your liability as guarantor is co-extensive with that of principal debtor and Bank will adapt easiest way for recovery, especially when the urban properties are mortgaged, they will prefer action under SARFAESI Act. But you have better chances to neogiate with the Bank. I agree with Mr.Shah that you should discuss the matter with Administrtive Office of the Bank. You represent them that the simple rate is to be applied since date of real NPA i.e., non-payment interest (30days after failure of payment of interest). Whether the Bank has ever intimated you about the symptoms of sickness and sought your help? What has happened to the hypothecated goods? Your willingness to settle the dues is a plus point for you. Bank will try to recover as maximum as possible but it does not mean that they are coercive in genuine cases. Hence feel free to discuss with the higher authorities of the Bank pleading the inability of the borrower for repayment, Bank's failure to intimate you about the sick symptoms (if they have not intimated to you at right time), applicability of simple rate from the date of default (not from the date on which they Bank classified the asset as NPA) and ask for considerable remission in the interest. It is also not true that they agree now and demand the balance later. However you should be careful in this aspect. You should give offer narrating all the circumstances to the Bank and obtain their acknowledgement. When they agree orally insist for a letter of acceptance from the Bank. At the time of payment, you demand for a letter that they are accepting the amount as full and final settlement of the dues of the borrower wherein you stood as guarantor. All the best for you.
