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Jitendra Gochhayat (Developer)     22 May 2014

Legal action can govt. banks take on default education loan

Hi All 



I had borrowed education loan of Rs 4 Lac from PNB  Bank in 2007 for pursuing MCA in a reputed institute  .I  belong to a poor family and  the bank issued loan for me without any security on behalf of my merit and my father's pension.It was a joint account including me and my father.Due to recession, I completed MCA without any campus recruitment and struggled a lot for a job.Ultimately,after 1 year of struggle I got a job with only 4 thousand salary.



Recently my father expired due to high BP.I am the only future of our family and now I am getting salary 8 thousands Only.The bank is calling to my family and threatening them .I am  ready to repay the loan ,once I will get  good salary. The interest and principal combined amount  is Rs 6 Lac  now.It will take too much time to repay.The Bank has given me 1 year to settle the whole amount.Otherwise they will file a case against me.




*The Bank doesn't have my PAN details and any collateral security.

 *Can the bank issue any legal action against me or my family?     

*Can the Bank send me to jail ?  

*Can the Bank spoil my CIBIL score?



I had shared the Branch manager about my problems many times.But he is asking to pay 5 Lac in two months.

5 Lac is a huge amount for my family.Even the total accessories and liabilities of my family will be  of 1-2 Lac.

After my father died I am struggling to maintain my family expenditure.So,it's a crucial moment for me.I am very simple in nature and not aware of any Laws.




Please help me.








 30 Replies

G.L.N. Prasad (Retired employee.)     23 May 2014

A borrower is supposed to consider pros and cons if some thing goes wrong in future.

The rules are made for all borrowers under the scheme with uniformity, and laid down procedure can not be made to suit one's convenience.

The amount advanced is Public money acquired through deposits, and Bank is liable to return those depositor's money, and can not say that as they have failed to collect amount advanced, they can not repay deposits.

It depends on discretion of Bank, and Bank has to act as per laid down regulations  including attachment of accounts, salary and CIBIL score automatically follows.

Jitendra Gochhayat (Developer)     24 May 2014

Thanks sir for your valuable reply .

I  am confident and eager to repay the loan as soon as possible.I am working hard to get a better job also.But I need some support from the bank also to give me at least 3 years .I am  afraid whether the Bank will drag me to court as per their warning.Please, guide me and give me more clarification about the consequences.I want to solve this issue myself without including my family members.

K.K.Ganguly (Advocate)     24 May 2014

1. You have taken the said loan from Bank agrreing to the terms of the loan including the repayment terms,


2. The Bank has advanced you the amount from public money deposited with them,


3. Bank can certainly take all legal actions against you including Money Suit against you and duly informing CBIL about your default in repayment,


4. Best course of action left before you is to talk to the Bank Manager in this regard.

1 Like

T. Kalaiselvan, Advocate (Advocate)     24 May 2014

Mr. G.L.N Prasad and Advocate Mr. K.K.Ganguly have given their valuable and proper opinion to your query.  You should understand the gravity of your problem.  Your personal problems will be a never ending story, you will be tightly gripped with one or the other problems and will be cutting sorry figures to the bank but the law is different, i.e., you have to repay the loan amount is the condition. Thus, it will be bad on your part to come out with lame excuses even at this stage after seven years of availing loan.  Better to talk the bankers and settle the issue amicably lest the consequences cannot be avoided.

1 Like

Biswanath Roy (Advocate)     24 May 2014

Have you received any demand notice from the Bank ?  If you have received it then pray before the Bank mentioning your monthly salary supported by a xerox copy of your pay slip that you are ready to repay 1/3 of your salary against your loan along with interests accrued thereon month by month and every month .  If the Bank disagree with that proposal you may file a Writ of Mandamus before the Constitutional Bench of the High Court for relief and redress.

1 Like

Jitendra Gochhayat (Developer)     01 June 2014

Thank you ,sir. No, I didn't get any demand notice from the Bank.Two months before,I got a letter from Bank regarding total interest relief for the borrowers who are economically weak and total family income less than 4.5 Lac yearly (Interim budget 2014).Bank had asked to send family income certificate,Contact details etc by email.I am eligible for the plan,so I have sent all documents to the bank but they are not responding  to mail and also if I am calling to the branch,they are just assuring that your claim is under process.I am quiet optimistic towards the repayment now.I want the bank to co-operate  me.I had already paid 80 thousands .If I am getting the interest relief, I have to repay only 3.1 Lac from 6 Lac.Then,I can request for  OTS to the Bank. I am worried whether the Bank will co-operate me or not.

Biswanath Roy (Advocate)     01 June 2014

Bank will definitely consider your case sympathetically in as much as you expressed your desire to repay the loan from your salary. If God forbids the Bank is not agreeable to acomodate you then you may contact me for the next successful step. My E-mail :- bnroy.advocate@gmail.com

1 Like

K.K.Ganguly (Advocate)     01 June 2014

1. The Bank itself has sent you letter asking for documents from you so that it can process those documents for total interest relief,


2. What more co-operation do you expect?


3. You have sent the papers which they might have foewarded to their Zonal or Head Office for necessary sanction to act further,


4. Maintain close liaison with the Bank.and keep paying as frequently as you can so that it is recorded that you are not a wilful defaulter.

1 Like

G.L.N. Prasad (Retired employee.)     01 June 2014

Remember.  The branch takes more interest in such settlements as it brings down Non Performing Advances percentage less in total advances position, and  percentage of such NPAs in total NPA, and  if NPA is lesser than last Financial year then it shows the productivity and efficiency of the branch.

What about your credit rating ?

1 Like

Jitendra Gochhayat (Developer)     29 September 2014

Hi Sir,

As I have mentioned earlier that,I got a letter from bank regarding interest relief (interim budget 2014) six months earlier.According to bank's requirement, I had sent them the details of my family income proof and contact details,as I was eligible for the interest relief plan.It's already 6 months,they didn't respond my mail and phone call.

Today,I got a letter to deposit the overdue amount 2.16Lac (Principal : 6.16 Lac)within seven days.Otherwise,my loan will be considered as to NPA after 90 days.

Six months ago,I had discussed with the branch manager for one-time-settlement for 4.8 Lac but he had relied me to take 1 year and collect money.I need enough time for it.

Please, guide me-

how can I get rid of this situation.?

What are the consequences for NPA account (for loan 4 Lac without collateral security).

Is OTS (one time settlement) a wise option for me ?

I was confident that they will definitely process my request for Interest relief plan(Interim budget 2014) but, they didn't.

I am interested to clear all my loan.But,it's impossible for me to deposit even 1 Lac within seven days.




G.L.N. Prasad (Retired employee.)     29 September 2014

Some link is missing Mr. Rahul.

You are prepared to opt One time settlement and prepared to pay Rs.4.8 lakhs but in last paragraph state that you are not having enough money.

There are several Banks that give personal loan to an employee, and you may take such loan and clear the immediate demanded amount to keep your credit rating.

Bank is going to declare NPA  only after 90 days.

It is a misconception to state that Bank is not having any security but any young man has to look to future, and for every housing loan or vehicle loan, he has to look to Bank, and particularly, the employees, they can not escape from Bank.

A honest citizen can advise you for legitimate repayment of borrowed money and never suggest the ways of evading it on some pretexts.

Biswanath Roy (Advocate)     29 September 2014

It is the normal practice of most of the Banks to adopt a belated method to consider the matter of partial relief from interest or OTS to earn more profit by levying further interest upon the loaned amount, that is why I advised you to file a Writ of Mandamus in the High Court in my earlier post.  However under the present situation there is no other alternative but to pay the entire dues to Bank by taking personal loan from some other Bank.

S.D.kahaley (advocate)     28 May 2015

Sir,(adv. Biswanath Roy)

Your advice to shri Jiten Rahul, to file a writ of mandamus  is commandable. It, on one hand exhibits one's sincerity to repay the loan amount and on the other, his inability to pay. Kindly tell a remedy for a girl who lost her father when she was only 4 years old. She  took loan for prosecuting her B.E. She succeeded with first class marks. She is still unemployed. She was looked after by her maternal grand father who was a pensioner and passed away some 3-4 months before. She takes tution of some students and earns hardly 4-5 thousands a month. under these circumstances what is the way out for her. The income she earns is not regular one can she offer to repay say @Rs. 2000/- P.M. and then, on refusal from Bank file a writ of mandamus. Pl. advice.



S.D.kahaley (advocate)     28 May 2015


One important question, How the term "willful defalter" is defined.Is there any citation?



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