Ramkumar A 03 October 2023

Crop loan of deceased person

Hi all,

My FIL has taken an unsecured crop loan in a nationalized bank for 1.6 lacs and unfortunately he has died recently. He also had a Jewell loan in the same bank which recently completed the tenure period. So we went to bank to renew the loan in different name. But the bank officials threatening us to close the crop loan first and then only we can talk about the Jewell loan.

Is there any RBI guidelines stating we need to close all accounts before renew/close the Jewell loan?
What will happen to crop loan taken by FIL which is a unsecured loan? Whether we need to repay? If we need to repay, Will we get more time to repay the crop loan and can we close the Jewel loan first?

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4 Replies

T. Kalaiselvan, Advocate (Advocate) 04 October 2023

The jewel loan also was availed by your FIL.

Since he has died, the crop loan has to be recovered by bank, hence without any assurance of repayment of the crop loan, the bank may put restrictions to transfer the jewel loan to any other person.

If you are so much interested to redeem the jewels by repaying the jewel loan, what prevents you from repaying the crop loan.

Or whether you are under imnpression that the unsecured loan should not be repaid?

The RBI has left such situations to the discretion of the concerned bank manager because it is the ultimate responsibility of the bank manager to recover the loans from borrowers.

Therefore there is no legal infirmity to insist on repayment of the crop loan of the deeased borrower this way.

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Real Soul.... (LEGAL) 04 October 2023

Crop. loan is very differant then personal loan, if the Jwellary loan is personally taken you can file suit for release of jwellary and for corp loan the rule will apply for corporates as even there can be solvancy and bankruptcy .

Just ned to check the loan agreements and gurantees

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Ramkumar A 04 October 2023

Thanks for your reply, we are not trying to redeem. We are trying to renew on another person as the tenure has completed.

Originally posted by : T. Kalaiselvan, Advocate

The jewel loan also was availed by your FIL.Since he has died, the crop loan has to be recovered by bank, hence without any assurance of repayment of the crop loan, the bank may put restrictions to transfer the jewel loan to any other person.If you are so much interested to redeem the jewels by repaying the jewel loan, what prevents you from repaying the crop loan.Or whether you are under imnpression that the unsecured loan should not be repaid?The RBI has left such situations to the discretion of the concerned bank manager because it is the ultimate responsibility of the bank manager to recover the loans from borrowers. Therefore there is no legal infirmity to insist on repayment of the crop loan of the deeased borrower this way.

T. Kalaiselvan, Advocate (Advocate) 05 October 2023

This act clearly indicates that you are trying to transfer the loan to an irrelevant person making it difficult for the bank to recover the crop loan.

A complaint with the banking ombudsman will also not fetch you a favorable reply, hence you may try to settle the crop loan and then either redeem the jewel loan or transfer it to any other person as per your proposal.