- This topic has 8 replies, 3 voices, and was last updated 1 year, 4 months ago by
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UHi,
For context my friend (F26) took some loans from NBFCs (5L, 6L and 4L from 3 different NBFCs) to help her partner out. She paid EMIs for a few 7 months approximately but then the partner couldn’t pay her the EMIs and eventually she also stopped paying. There were few others like 30k, 50k loans as well.
Now one of the NBFCs have initiated proceedings under Section 25 of Payments and settlements act. A legal notice and summon has been sent, my friend asked them for a settlement offer which they are doing at the last emi + interest.
My main question is –
1. As per my research, it is a quasi criminal proceedings. How bad can it get if banks initiate these proceedings for other loans as well.
2. Should we reply to these legal notices and summons when in fact that they do want to settle.
3. My friend wants to settle it at 30-40% of the amount. Is that possible?
4. There was no intention to cheat because they were paying the EMIs initially. At present my friend has told the NBFCs that she lost job that’s why can’t pay when infact she does have a job but doesn’t want to pay for her partner since it was a error of judgement on her part that her partner will pay off his loans on her name.Thanks in advance!
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I1. It is a civil dispute, and it could worsen due to harassment by TPAs.
2. You may contact the bank’s customer care, but there is no point in spending money to reply to legal notices.
3. Yes, settlement is possible at 30-50% of the principal.
4. From the bank’s perspective, she is the defaulter, and it may not matter much if she has taken the loan on behalf of her partner. -
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RLawyer here.
1. It is not a quasi criminal proceeding. It is of civil nature. As far as the bank is concerned, they are concerned with the repayment only. So they will go to any extent permitted by law to get back the money.
2. Sending a reply notice will not stop them from initiating recovery proceedings. Since the banks will have proper documentation of grant of loan and non-payment, any reply notice sent will have no effect. They will still proceed against the borrower.
3. Up to the discretion of the bank. I have not seen them settling at such a low amount.
4. Does not concern the bank and will not stop them from proceeding against the borrower.
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UFor the proceedings, we looked up the case number and it shows criminal proceedings.
Also, if someone doesn’t have the money to pay how are NBFCs going to recover the unsecured loan?
The whole aim is to not get into any legal complications and pay off with settlement. Hence knowing how bad it can get so that the person is prepared.
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RCan’t say much about the criminal proceedings unless I know the nature of the case they have filed.
If the borrower has no money to repay the loan, the bank will realise it from the borrower’s movable and immovable properties. If there are any guarantors to the said debt, the bank will proceed against the guarantor also.
It will get pretty bad. Bank authorities report to their higher officials. They will have huge heat behind them to ensure repayment. So they will not back off. As far as any settlement is concerned, do not expect any lenient approach from them.
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UIdk if mentioning the section of the case will help but it is section 25 of payments and settlements act.
And thanks for your inputs. There is no collateral or any guarantor. All the loans are unsecured and taken through NBFCs.
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RIt’s the bouncing of electronic funds. Usually dishonour of any auto debit facility. There is risk of facing jail time and fine if found guilty.
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