Very few people know what our legal rights are in India, so many times banks and financial institutions use more illegal methods than recovering from the legal process in case of a defaulter of this loan. Guidelines are issued for customer protection and recovery agents of banks through the Reserve Bank of India, but how much it is followed is a matter of the amendment. Therefore, through this article, we will try to know in a legal way how to avoid mortgage loan defaulter.
There are mainly two types of loans, one is secured loan and unsecured loan, in which today we will see the type of loan for discussion, what is secured loan. Will try to know what is it to be a defaulter and what is this concept of Tthe non performance, asset which will try to know from the point of view of the customers. Most of the banks and financial private institutions have a legal team, but they are seen working for how they can recover their loans in less time by bypassing the legal or without the law.
In 2008, a complaint was filed with the Reserve Bank of India about exploitation by representatives of banks and financial institutions by a number of customers. In view of this, RBI has tried to control this banking recovery system through regulation through guidelines. Due to Corona and lock down, the problem of paying home loan installments has been created for many people, in which problems have been seen in business and jobs. So we will try to know this problem in the form of legal awareness.
What is Mortgage Loan Defaulter ?-
When we take a loan against the security of something, whether it is movable or immovable property, it is considered as a secured loan, which makes the loan secure. When we take this loan and if any installment is left in paying its installments, then banks or financial institutions give a simple warning. When we do not pay more than 3 of these installments, then the bank or financial institution sends us a notice of default. If your past record is good and you are able to convince the bank for not paying your installments, then the bank gives you some time to pay these installments.
Under the SARFESI law, the bank sends you 60 days’ notice to pay these pending installments, if you are unable to pay those installments even in this time, then the bank has been given the right to get this amount by selling your property under this law. Is. Legally, this process is quite complicated, so most of the time banks are more likely to use pressure through agents to collect their installments. According to the law, you have been given the right to listen to you, under this you can get justice for yourself.
In the Corona times, many people have seen a lot of loss in their jobs and business and due to the huge amount of loan installments on the property, they have to suffer to pay it. Moratorium period was also given by the government and the Reserve Bank, but even after this, there are some problems in life due to which your financial condition deteriorates like any serious disease due to which your financial condition worsens. Therefore, if we are successful in explaining our problems to the banks, then you get the time within which you have to fill this default amount.
What is NPA loan? –
NPA means non-performing assets, in which the principal amount or the interest of the loan is not recovered and it is reflected in the account of accumulated expenses in that financial year. Banks mainly get to see this evidence in large quantities in corporate loans, but for the corporate sector, bankruptcy protection laws have been made, under which these businessmen are successful in protecting themselves. No such law has been established for the ordinary borrower and he is not legally capable enough to fight against the legal team of any bank, so he gives up.
Therefore, the purpose of writing this article is that we have to understand how we have to come out of this problem by using our rights legally. In order to compete in the market mainly for private banks, the banks have to give such loans, where they are seen violating some rules of lending, the result is that going forward, that customer is unable to pay his installments, becomes incapable. Private banks know that this loan has been given in exchange for the security of the property, so they do not think much of the customers to recover this loan and consider their interests more.
Non-Performing Asset It is a matter of headache for the banks, which has consequences on the financial condition of the banks and it results on the goodwill of the banks. Therefore, most of the banks create more pressure on the recovery team for this and due to the Reserve Bank giving the facility to the banks to recover this loan to private entities as agents, these agencies sometimes use such tactics, which violates the law. it happens. Banks and financial institutions try to distance themselves from this. Therefore, this term non-performing assets is very important for banks and financial institutions.
What is the Debt Recovery Tribunal (DRT) –
In India, mainly separate tribunals were started to be established after the liberalization of 1991, in which the DRT established in 1993 under the Recovery of Debt and Bankruptcy Act. The main purpose of which was that many law and order cases were pending in the proposed court from the beginning and there was a lot of pressure on them to settle it, so DRT this judicial system was created for the matters related to the banks through the tribunal which should settle the cases expeditiously. The cases in which disputes are above Rs.10 lakh are settled through this tribunal.
Mainly looking at the property prices, most of the mortgage loans are more than Rs 10 lakh, so in these cases, mainly when a customer challenges the recovery process of the bank in the court, then those cases mainly come to the tribunal. . According to the 2016 data, 93000 cases in DRT are pending in the judicial process and in view of the failure of the previous pending judicial process, it is hoped that these cases will be resolved expeditiously.
After 1991, changes were made in India’s democracy, mainly accepting the capitalist system, through which the Tribunal was introduced to this judicial process. In which the NPAs of the banks were kept in front and in the old judicial process, these cases used to be pending for years, which made it difficult for the banking sector to do business, it has been seen according to the survey of the World Bank. Therefore, from the point of view of the customers, we have to look at this process in view of the customer protection law and if any rule is there in violation of the rights of the customers? We have to see this.
Debt Recovery Information Process –
As we have seen, in 1991 in India, a tribunal called DRT was established to improve the judicial process and this system was brought mainly to save the banks from bankruptcy. Customers do not need to have much hope for this as this system has been brought in with the aim of promoting capitalism. Separate laws have been made to recover the debt of the corporate sector and to protect the customers, but for the protection of ordinary customers, some such effective laws are not seen till date.
We get to see the protection of the Customer Protection Act, but very few people in India get to see much information about it. We have got many rights under the Reserve Bank of India and the Customer Protection Act, which we need to know, in which we see what information we should have when our installments are pending. No bank or financial institution should do any process outside the purview of the law. We need to know what are the rules for the recovery agent of the banks. In which it is necessary to check the following things.
- The ID card is a must.
- It is necessary to have such a letter chosen by the bank as the representative.
- You should first get the message of the representatives of the banks who are going to contact you with the mobile number.
- It is necessary to have police verification, we have to check this.
- There is no need to attend fake numbers other than any bank and we should block such numbers which are meant for exploitation.
- If there is a defaulter, then there is the right to get notice and to get the time given under the law.
- You have the right to have a say before property attachment.
- How to come out of the defaulter process / How to clear defaulter loan –
Generally, when an ordinary person is a defaulter of banks, it means that he is not paying the installments due to his personal compulsion. How to get out in such cases is a very important task that needs to be known. When we get caught in any financial crisis, then all our near and dear ones like to stay away from us and we understand who is ours and who is not. Therefore, when we get caught in the financial crisis, then we have to understand how to face this economic crisis.
In the Corona times, the government and the Reserve Bank have tried to give us relief through the Moratorium, but some people have not got to see any results from this. So to get out of this, we should take some time first through talks with the bank. Bank is ready to operate you most of the time for this because after seeing our past record, bank gives these facilities through which we can come out of this problem.
That’s why it is important for us to understand the bank recovery rules first, otherwise we take some wrong financial decision through fear, in which we pay the installments of banks by taking money from outside with high interest. Due to which instead of solving the problem, it becomes more complicated in future. Therefore, if you are unable to pay any installment, then without pressure, tell this inability to the recovery agent and when you have the money to pay that installment, then fill it so that you can come out of this vision cycle.
Legal protection in respect of loan –
When we take a mortgage loan from any bank or financial institution, then we become a customer of that company and it is your right to mix a copy of the agreement between us and the bank under the Customer Protection Act. In most cases, this copy is not given to us, and in this agreement the bank or financial institution cannot get you to write any term which is inconsistent with the rules of the Reserve Bank or is inconsistent with your fundamental rights, then that term is not binding on you.
If you take a loan honestly but are unable to pay its installments, then we should keep in mind that no criminal provisions are applicable to you. Many times the recovery agents scare you with criminal sections and want to recover the installments, due to which you pay these installments by misbehaving and get caught in financial trouble. To get rid of a problem, you get caught in a visible financial crisis, so when you become unable to pay any installment, then the bank has to listen to you and give a solution on it.
You have been given the right to take help of any system of customer protection law, civil court and law and order. You can complain to the recovery agent to the bank and if the bank also does not listen to your complaint, you can file a complaint to the Reserve Bank through social media or through email. If the Reserve Bank also does not take cognizance of your problem, then you have been given the right to go to the court for justice. In most of the cases, the bank tries to recover its loan by bypassing the legal process.
Consumer Protection Against Loan –
Mortgage loan This process comes in the financial sector, which is regulated by the Reserve Bank and in this, it also works for the safety of the customers by regulating it. Consumer Protection Act It only serves to protect the rights of the customers. In front of the companies, from the legal point of view, the customer is a small entity that cannot fight against any exploitation on its own, so the Customer Protection Act was created, in which the rights of the customers were violated by any bank or by a financial institution. Yes, such customers have the option of getting justice in such tribunals.
While giving any loan, any bank or financial institution takes the customer by writing an agreement, in which the terms sometimes act to exploit the customers, for this under the Customer Protection Act, we should see the option of applying for justice. Because many people do not know this option, banks or financial institutions misuse it and they are deprived of the facilities which should be given related to customers, so what are we as our legal officers, customers and the loans we have taken in this What services is the bank giving us? Must see this.
After being a mortgage loan defaulter, people take their loan against their property, so always talk to the bank in defense. If your situation is really in trouble and the bank is not helping you in this situation, then this option must be considered for you under the Customer Protection Act. For this, it is necessary to see what the duty is towards the customers of the banks, only then you can drag them to the tribunal under this law. In customer tribunal, justice always comes in favor of customers, so we just have to present paper proof of our problem and other technical evidence to the tribunal.
Ways of Bank Harassment Complaints –
As we have seen that what is the code of conduct for the recovery representative and agent by the Reserve Bank, so it is necessary for us to be aware of our rights and rights. Therefore, we should know who to complain about the exploitation by the representatives of the banks. Most of the times, if banks are neglected to deal with the customers of their elected representatives, the facility of registering complaints through email is available to the Reserve Bank.
Before the Internet, complaining about an office was very difficult, but today there are many options available and as a whole, we can collect evidence through the video record with the help of our mobile. Record the phone calls made and send the same to the Reserve Bank through online social media or through email. If the cognizance of our complaint is not taken by the Reserve Bank also, then we have been given the right to file our complaint in the civil court.
If any recovery agent tries to harass you, then we have the right to lodge a complaint in your nearest police station. Most of the time there are attempts by banks or financial institution to intimidate through fake court orders or police complaints, it is also important to be careful. Because in the atmosphere of fear, most of the time we consider ourselves to be so criminal that criminal charges on you are intimidated by so many recovery agents or representatives. Therefore, keeping all these things in mind, honestly save yourself from this process.
In this way we saw how to avoid the process of banks in mortgage loan defaulter cases and how to save your property, if you are unable to save, then the bank should sell it in the market before the process and get the right price and this will end the bank’s loan. Do. This option is the last time or to save your property, discuss with the banks and ask for time so that the banks can pay the pending installments and interest. For this, the right information can remove your fear, so choose the right option to get the information.
Through this article, we have seen how the mortgage process is done and what we should do if the recovery agent misuses the law. Banks’ debt has been protected through the DRT Act and this law has been made to avoid the loss to the banks due to the sinking of the loan. Through this article, an attempt has been made to give information about how we can avoid exploitation by the bank or financial institution through the Customer Protection Act.
We see in the society that usually the representatives of the banks try to recover the installments in an illegal way, we have to understand this. In today’s urban economy, we have to take a large amount of loans through loans to buy a house and have to face many financial crisis in our life due to which the loan installments get stuck. Most of the customers are in a lot of stress due to non-payment of these installments related to such loans, problems arise due to lack of information. Therefore, by getting information, we can come out of this problem, there are many options for this which we have seen from this article.