Loan recall notice
HEET VAIDYA
(Querist) 04 June 2014
This query is : Resolved
dear sir,
i am having a cash credit account with a nationalized bank. due to certain business issues i am unable to maintain turnover into my cash credit account but i am paying my due interest regularly before the end of the quarter.sir, now even if my account is not NPA, bankers are telling that they will issue a loan recall notice. sir i have asked them to pl give me a six months time to regularize the transaction of my account. sir my cash credit account is due for renewal next month. will they renew it?
sir awaiting quick reply
Dr J C Vashista
(Expert) 05 June 2014
Get it settled with the bank otherwise, the bank has its own rules, regulations and procedures therefore, the bank shall issue notice for recalling of loan with interest and incidential charges.
Rajendra K Goyal
(Expert) 05 June 2014
While renewal of the limit in CC account total transaction and a no. of other factors have to be considered by the Bank. If Bank reduces the limit it can be increased later. Bank has to judge how, when, where the facility is to be provided and to what extent.
R.K Nanda
(Expert) 05 June 2014
it is bank's discretion.
ajay sethi
(Expert) 05 June 2014
it is at bank discretion .
malipeddi jaggarao
(Expert) 05 June 2014
Cash Credit is a running account and the entire turnover should be routed through this account as the facility is extended based on the turnover projected by you. The significance of turnover in the account is that the money thus availed is used for the business purposes. You are also supposed to give the stock position periodically upon which the drawing limit will be derived and bank will decide either to allow you to utilize the entire limit or reduce it basing on the stock. I suppose, you are aware of these norms.
Now, coming to the query, though you are paying the interest periodically, the bank can not continue the facility for ever. It will recall the advance. However, if this is temporary, and you have genuine reasons for not routing through the account, you better start showing turnover in the account and advise the correct position to the bank.
As regards your further query that whether the bank will renew the facility of not, it all depends upon their perspective. If they are confident that you will show the turnover, you can convince them. Otherwise ask them to convert into Working Capital Term Loan which is repayable in monthly/quarterly instalments.
Biswanath Roy
(Expert) 06 June 2014
ANALYTICAL AND APPROPRIATE CLARIFICATION GIVEN BY MR.MALIPEDDI JAGGARAO. NOTHING TO ADD.
Guest
(Expert) 06 June 2014
Perfect advice by Shri Jaggarao. Act accordingly.
T. Kalaiselvan, Advocate
(Expert) 06 June 2014
I too agree with the advise and opinion of expert Mr. Malipeddi Jagga Rao. Nothing more to add.
Guest
(Expert) 07 June 2014
You are welcome Jaggarao ji.
K.K.Ganguly
(Expert) 07 June 2014
1. Settle with the Bank now before the account becomes NPA,
2. Otherwise, the Bank will initiate SARFAESI proceeding & realise the outstanding amount by selling the mortgaged property.
