Withdrawal of collateral security

Collateral Security/Personal Guarantee are given by virtue of a tripartite agreement ie. The Borrower, Guarantor and the Bank. Bank is the beneficiary of the Collateral Security/Personal Guarantee. Bank has given limits to the borrower based on inter-alia the collateral security/personal guarantee. Release of a Guarantor or Collateral Security is the decision of the Bank. Depending upon the present status of your account with the bank ie. Performing Asset or Non Performing Asset, they shall take a view. Liability in the account also is a factor. In case the value of the Collateral Security/Personal Guarantee is enough to cover the present liability (not the limit. Limit can be more than liability), you can approach the Bank to reduce your limit to the present liability whereby the collateral security/personal guarantee shall be enough as per the banking norms. One thing to be remembered is that nobody can withdraw a collateral security by giving a mere letter. As of personal guarantee, Guarantor can withdraw his Guarantee at any time and the limitation shall run agtainst the Bank for 3 years from the date of letter withdrawing the guarantee.Bank can initiate legal action against the Guarantor within the Limitation period as explained above. Whether Bank shall freeze the account? May be or may not be. It depends upon the present status of your Cash Credit account. Therefore, please go the Bank and discuss the matter and get the matter amicably settled instead of running to a Lawyer. Taking legal steps by you and/or Guarantor will only complicate the issue and compel the bank to take drastic action as per their norms.

Yes, the bank can influence the decision to lower the rate