Dear Sirs,
An Account was classified as NPA and hence interest was not being debited to the account. The party in the meanwhile, made payments into the account. As and when the party made payments into the account, the amount was being appropriated to wards and over a period of time the outstandings in the said NPA account has become NIL. Now, the Bank has refused to release the security held and is claiming interest on the said interest.
As per RBI circular, as when interest is made into an account as NPA, the amount is to be first appropriated towards the accrued interest not debited to the account and in case of any balance thereafter has to be appropriated intowards the outstanding balance.
Now considering the current outstandings in the account is zero, can the bank proceed against the borrower under the SARFAESI Act for recovery of the dues? What is the option left with the borrower?
