I Have An Account in Bank Of India CC Limit Of 40Lacs and Bank Guarrantee is of 60Lacs In Favour Of NSIC And Margin Money of Bank Guarrantee is 20Lacs FDR . Due To Financial Crunch this Bank gurrantee is Invoked By NSIC After Adjusting 20 Lacs From 60 Lacs and My Payment of 8 Lacs is also adjusted in bank guarrantee amount . Balance amount is merged in my CC Account and made my CC Account in OD account. And Made My Unit Sick...
Invoked Bank Guarantee amount will be debited to CC account... Your payment of Rs. 8 lakhs is adjusted to CC account.. Bank must have taken "Letter of Lien and Set Off " from you at the time of taking the documents. Hence their action is correct.
It appears that they have done the arrangement without giving any kind of notice to you thereby making your unit sick. You can represent and seek some kind of a restructuring so that you could be able to run the unit
It is a wrong practice to debit the liability of invoked babk guarantee to the Cash Credit account. This will wipe off the drawitg power available in the Cash credit account. The devolved Bank Guarantee / LC liability should be kept seperate unless the borrower has been sanctioned interchangable limits.
Mr A.Jham - you say that due to financial crisis, NSIC had invoked the BG. Therefore, your business was already in crisis. Pls do not blame the bank - your unit did not become sick just because the bank merged your BG limit to CC limit.
BG limit is non fund based working capital limit, and CC is fund based working capital limit. If it is mentioned in your sanction letter and/or loan agreements that the bank has the right to merge BG with CC or CC with BG, then bank is correct in doing so. Frankly, even with the little information you provided, I think it is better that your fund based working capital limit has increased.
I M Not Blaming Bank , I M Sicking Help From All ..
1)I M Aware Of It Bank Guarrantee Is Not Fund Based,
2)My Bussiness is in Crisis Because My CC Limit is 40 Lacs While They Have Merged Balance Ammount in CC Limit, Its Become OD and Bank Has Stop Transaction. and They Have Asked For Reduce Of OD. and they have made the account NPA.
3)They Have Started Doing Synchronisiation Act.
4)My Sanction Letter of Loan aggreament and bank guarrantee are separate.
Verify what is the interest that bank should (legally) charge (as per agreement terms) on account of Invoked BG account which has now become a fund based limit. If it is lesser than the interest on CC limit, you can file for damages. If it is more than than the interest on CC limit they have done a favor to you. But on the other aspect, you can file for preventive relief (injunction petition under specific relief act) to prevent him to merge both the accounts because that will stall your flow of working capital and hurt your business and without doing business you cannot repay the loans. The better way is to first try to convince the bank to initiate Securitization proceedings if they wish but keep the CC limit as it is so that a possibility is left for you to generate revenues out of business. If that is not heeded, file for injunction petition on the same lines.