Cheque (fund inefficient)

Dear Sir,


Please suggest for the appended query: -


I have taken a education loan in the year 2007 and started repayment in the year 2009 till mid 2012  we have almost paid the Principal amount while interest is outstanding as on today and due to financial crunch we could not pay and restart repayment.

We have requested Bank to consider GOI's and IBA's Circular on Education Loan Waiver which states as follows ( -

Interim Budget 2014 in February by the then Finance Minister Chidambaram bring comforts to education loan borrowers stating moratorium period for all education loans taken up to March 31, 2009, and outstanding as of March 31, 2013. hence GOI would take the Liability for Outstanding Interest till 31st Dec 2013.

Now the Nationalized Bank has filed a case against my gurantor who is a pension holder, blocking her accounts and demanding money.

We are ready to cooperate but not a satisfactory answer received from them and they are forcing us to sign loan renewal letter i.e. Promissory Note as we have not signed it for last 6 years.

and just now Bank' Lawyer has recently sent a letter for NI 138 to pension holder stating that your given cheque is not working and due to funds insufficient in account, we will take legal action against pension holder.


Irony is, we have not given a signed cheque to bank in recent 7 years so how they can do this.


Please let me have your thoughts on the same.




1) the document you refer to applies only to the EWS loan holders. Further, it's implementation was deferred. You have to check whether it has come into operation.


2) bank is within right to try to effect recovery from the guarantor if the loan holder defaults and may take all steps necessary, including taking money from accounts it has control over.


3) if the pension holder has not given any cheque he may respond to the notice accordingly. 


4) not signing the loan renewal will only make the bank proceed faster towards recovery / legal cases.




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