Civil Procedure Code (CPC)

Bank does not want to accept early payment of Loan


XYZ Co LTD has taken a loan of 30 Lakhs to be paid within 5 years from United Bank of India. During the 3 years, 15 Lakh principal along with interest have been repiad.

Now the directors have decided to pay-off the balance principal of 15 at one go. As the company is strong, the bank manager is resisting this payent and insist that the loan schedule must be followed, which the directors cant follow due to high rate of interest.

What are the banking norms regarding such cases? The company is willing to pay but the bank is not ready to accept. This is a strange phenomenon.

 

What are the solutions?

 
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Another thing i forgot to mention. The loan was taken against the office property , so the deed is lodged with the bank. The directors want to take back the Deed and might decide to sell the property.

 
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Advocate

 

ACCORDING TO ME YES ONE PERSON CAN GIVE HIS LOAN PRIOR TO SCHEDULE HOWEVER  FOR THIS A SPECIFIC AMOUNT IS CHARGED AS PRE-PAYMENT CHARGES ...

SUGGESTION - SEE YOUR LOAN AGREEMENT  WHETER PREPAYMENT CLAUSE IS THERE . IT MUST BE THERE.  

 

 

       


 


 


 

 
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When the Borrower wants to repay the same entire sum in one shot, Bank is obligated to accept to entire outsandings and has to release the documents unless otherwise required. If Bank fails, you can prefer complaint before Consumer Forum or Banking ombudsman

 
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The representatives of the Bank gave a visit to the office premises and checked some account books and said that business is running fine, so cant accept early loan payment. I am so angry. These bankers are so greedy.

Sharafat se koi paise dena chahta hai toh woh bhi nahi lete.

 

Thanks both of you sir and we will keep an eye on this matter.I will check the loan agreement.

 
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Advocate

For premature closure of the loan, banks stipulate conditions in the loan documents itself imposing penal interest for the amount paid before maturity.  When you make payment as per your agreement, bank has to release the security documents.

 
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FIN

1.Instaed of making verbal communications, submit a written letter (Obtain  acknowledgment under seal and signature) stating that on dated ....and dated......you have repreented to the bank in person to pre pay the loan and citing  concerned clause of pre payment of loan, in loan agrrement , and state that you want to close the loan,and ask the bank to supply you the latest statement, by registred post within 7 days,and state that cheque number ........dated .........for Rs....drawn on bank name .........is enclosed herewith towards the balance payment of principle amount of Rs.....

2.In case you do not find any pre payment clause , you may lodge a query with RBI and ask whether on the date of issue of loan forms to you , banks enjoyed the discretion to publish the prepayment clause or not.

3.In case the bank do not reply to your letter as mentine at 1., you may represent to the nodal officr of the bank, whose contact details have to displayed in the bank and is also onthe bank website and lodge yur grievance.

You may mark the copy to RBI.

You shall get the desired response from the bank.

 
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BE/ LLM in Corporate Laws

You have to go through the Loan-agreement. Generally, a clause of early repayment is included in the contract but the only thing is that the bank charges some penalty/ penal interest over the oustanding period.

Please go through your Loan-agreement carefully.

 
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I have spoken to the Nodal Officer of the bank and they have confirmed that one can pre-pay the loan without any difficulty.

Thanks to our respected posters here for giving me courage to tackle such beaurocratic bank officers.

 
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Advocate

Most of the Bank officers are ignorant of laws and also arrogant against the borrowers.  After the enactment of the draconian SARFAESI Act, bank officials are thinking and acting, as if they are more than Courts and judges.  That is why they dictate any terms with the borrowers and customers.  In this context, the legal fraternity has greater role to play,to make them customer-friendly.

 
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