Payment of Loans
I had taken a personal loan from ICICI Bank, bhubaneswar in 2012 for 300000.00 , now I have balance amount of 100000.00 to pay including all penalties and taxes. Now I did not have a job. So I need atleast 3 month time, so that I will start smooth payment.
Even though each bank policy might differ from the other, the general norm to be followed in case of default in payment of EMI of the loan in the first month is levying a late payment charge which the borrower will be liable to pay. However, defaulting for three months may cause problems of a more serious nature. Every bank has to declare a loan as non-performing to the Reserve Bank of India if the borrower defaults in payment of EMI for a period of ninety days. Subsequent to this, the bank may proceed to initiate legal proceedings against the borrower under Section 58 of the Negotiable Instruments Act. You may also consider proceeding to discuss the matter with the bank manager directly and establish grounds agreeable to both parties in order to escape brutal legal action.
Thank you for writing to us. Here's our response, we hope this helps you.
According to what you stated to us about your current situation, the relationship between you and the ICICI Bank (Bhubaneswar) is purely in contractual terms. Hence, you will be governed by the "terms and conditions" of the contract between you and the ICICI Bank for the personal loan amounting to 3 lakhs which you have acquired from the ICICI Bank. We are sorry to hear that you have lost your job. But most likely this situation is not in your favour. You are only left with few options to tackle your situation.
First, you have to approach to the ICICI Bank saying that you are having financial crunches because you have lost your job and hence, you are unable to pay the dues and the said EMIs mentioned in the contract for personal loan. Even if the Bank may consider that you have a genuine reason, you might have to incur some penalties for it.
Second, you have to ask your bank to extend your loan term and reduce the EMI which is needed to be paid monthly. Asking so will help you pay the due amount, penalties and taxes in the extended term.
Third, you can also ask the bank to restructure the contract for you. By doing this you might be able to get your rate of interest reduced to your liking, extension of loan term, etc.
Fourth, one time settlement where the interest has been increased to such an extent that the principal amount is less than the interest and the person is unable to pay the loan then the bank may allow the payment of loan through small installments. It is to be noted that one-time settlement rarely happens.
You are warned that the Bank may not negotiate with you or may take away your collateral (if you have mentioned it in the terms and conditions of the contract) and sell it off. If no such things exists but the contract mentions about the guarantor in the contract then the bank may ask your guarantor to pay the due amount, penalties and taxes.
If the contract does not mention any guarantor then you are requested to provide some collateral or security (either movable asset or immovable asset) to the bank that the loan is considered to be a secured loan which makes Banks have little faith on you for the repayment of the loan taken from them. But still in the future you cannot clear the loan then Bank can take repossession of the assets and sell it in the auction.
Lastly, we would recommend you to search for jobs online. There are many jobs which requires you to work from home and pay you for the work. Or you can do some part time jobs like teaching students for the time being and save the money to pay the EMIs and penalties. This would also ensure that the Bank would think on the decision of restructuring the contract and extension of loan term.
Hope this helps you in making a decision so important to you. We wish you best.
Book a phone consultation with a top-rated lawyer on Lawfarm.