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Benedict   10 September 2015

Urgent regarding education loan on property

Kindly please respond to what should be my course of action .

My grandfather owns a property in chennai and my family is a joint family so the property is divided between my father and my uncle and have built a joint house with both family living  together in the property which is split in the middle and all four sides of the property for each heir has legally marked boundaries.

I just recieved a offer letter from an university abroad for me to do my masters and so I applied for education loan and thought of providing my Fathers side of the property as a collateral for my education loan .The bank's manager visited the house and then went back,now their legal team are saying that since the house is jointly built they are hesitant to value it as a collateral for my education loan.

I come from a upper middle class family so dispersing the fee required for my education abroad would be really hard and would tax my family and our financial stability so I dont exactly understand what would be the legal issue arising from the property

1) The property is legally registered in my fathers name.

2) Already once my father had pledged and took back the document.

3)The drawing of the property clearly shows the seperation.

4) Since it is an ancestral property I dont plan on letting the property be taken by the bank and so I plan on working part time while I study and pay the loan within three years or so

What should be my course of action should i give them any clause cause i'm sure i would need education loan to study abroad and the property is more than worth for the loan I have asked for any immediate input would be highly appreciated Good Sir's




 5 Replies

SIVARAMAPRASAD KAPPAGANTU (Retired Manager)     11 September 2015

This is not a matter to be discussed with Lawyers but to be discussed with Bankers. Even before taking loan if you approach a Bank with a Lawyer's advice or through Lawyer, it will put you in a very poor light in the yes of the Banker. From the facts provided by you in your query, there should not be any problem in accepting the said property as collateral (under mortgage to bank) for providing an Educational Loan to you. However, Legal Team of the Bank decides based on perusal of the title documents. Unless a thorough check is made of the documents, one cannot comment on the decision of the Bank. Please go through the RBI guidelines in the matter available in RBI web site link as given below: https://rbi.org.in/scriptttts/NotificationUser.aspx?Id=369 You can also approach another bank in your area for the loan who may be willing to give the loan.
1 Like

G.L.N. Prasad (Retired employee.)     11 September 2015

Simple thing is execution of Equitable mortgage by all concerned parties and obtaining guarantee from all such legal heirs.  This is simple.

1 Like

SIVARAMAPRASAD KAPPAGANTU (Retired Manager)     11 September 2015

G L N Prasad jee, your solution is OK if the other party agrees. Having already executed a deed of separation in the respective names, why the other party should join in executing EMT. Bank which said "no" to the property to be taken as security must be having a valid reason. Unless that reason is known and analysed, we may not be able to give a solution. Loan applicant may come back and inform the reason because of which the Bank is not accepting the said property as security. The option of going to other bank is always available to the loan applicant. But if such other bank too rejects for the same reason?

G.L.N. Prasad (Retired employee.)     11 September 2015

One has to rely on Bank's Legal adviser's opinion, and as to why they are insisting.  There may be some flaws in separation process.  That is only an alternative.

The best /simple solution is if that Bank is not prepared to advance, go to another Bank if the documents are proper.

T. Kalaiselvan, Advocate (Advocate)     19 September 2015

If a mortgage loan was already availed based on the same documents, there should not  be any problem for sanctioning loan this time, however it depends on the discretion of the Bank manager and not as a rule, because the bank manager may not like to risk himself for others sake.  Hence you may approach some other bank for loan.

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