Can’t repay your loan? Here are the rights you have as a defaulter



A lender call or a visit from a loss collection agent is every borrower’s worst nightmare. A person who is already in a state of financial stress is forced to face the humiliation that the lender’s agents descend upon him. However, even if the borrower does not fulfill his obligations, he does not give up his rights to an asset or fair treatment. Lenders must follow due process when initiating proceedings to recover their contributions. Here are your rights as a borrower.

Confidentiality borrower

Lenders sometimes use loan collection agents to get borrowers to pay off their loans. The confidentiality of the borrower must be respected. These agents can contact the borrower at their designated location. Unless otherwise noted, they can contact him either at home or at work.

They can visit him from 7 am to 7 pm or at any time specified by him. The collection agent cannot discuss the details of the case with any other person unless the borrower has given permission to do so.

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Decency and decent behavior

Agents cannot cross a line that banks have agreed on as part of their customer commitment code. They cannot violate the norms of decency and civil behavior during these visits. If the agent intimidates or humiliates the borrower or his family, the latter can file a complaint.

Should get corresponding notice

In the case of secured loans, the underlying mortgage assets can be repaid by lenders in accordance with the Law on Securitization and Reconstruction of Financial Assets and Enforcement of Collateral Rights (Sarfaesi). However, the lender must properly notify the borrower. A loan is classified as a non-performing asset (NPA) if it has a maturity of 90 days. In such cases, the creditor must first give the defaulter 60 days’ notice. If the borrower does not make payments within the notice period, the bank may continue to sell the assets. However, for the sale, the bank must send another 30-day public notice detailing the sale.

Assets must be measured fairly

Prior to the sale of assets, the lender must issue a notice indicating the fair value of the asset, as well as the starting price, date and time of the auction. The value of assets is determined by the bank’s appraisers. If the borrower believes that the asset is undervalued, he can participate in the auction. He may also find a buyer who is willing to buy the asset from the lender at a fair price.

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Get income from the balance

Even if the pledged asset is returned to the property by the lender and sold at an auction, the entire amount sold at the auction does not belong to the lender. The lender can return their contributions and the excess amount must be returned to the borrower. This money legally belongs to the borrower and must be transferred to him without delay.


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