Debt Recovery

Bank selling the loan

I am 65 year old. I had taken home loan from a bank in 2011 but due to bad business I have not been able to pay EMIs in last ten month. Bank has filed a recovery case in DRT. Couple of days ago I got a call from lender bank that they are going to sell the loan to other financial institution.Can the lender bank do that? I spoke to my lawyer but he has no idea about it.

Expert Advice


Dear sir, Banks are absolutely entitled to assign their rights to third party i.e. ARC of FI and after assignment third party Asset Reconstruction company or FI steps into shoes of the Bank. If there is any case filed against you, please proceed to contest the same, otherwise there will be ex-parte decree against you for exaggerated claim. You may have defaulted the loan, but by contesting claim, you can buy some time and later on you can negotiate for settlement. Please consult lawyer practicing in concerned DRT and find out status of case. Under law, borrower's consent is not required for assignment, but assignment for loans with security of mortgage requires compulsory registration.

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Yes, the lending institution can sell the loan. If you read your loan agreement carefully, you will note that there is an assignment clause included. This clause permits the lending institution to assign (sell off) your loan without your consent. In your case, the institution buying the loan will replace your present institution before the DRT. Henceforth, if you wish to repay your loan, you may have to approach the new institution.

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Adv. Manish Acharya

Partner
LawLeo.com
Andheri , Mumbai


Yes, the lending institution can sell the loan. If you read your loan agreement carefully, you will note that there is an assignment clause included. This clause permits the lending institution to assign (sell off) your loan without your consent. In your case, the institution buying the loan will replace your present institution before the DRT. Henceforth, if you wish to repay your loan, you may have to approach the new institution.

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Adv. Manish Acharya

Partner
LawLeo.com
Andheri , Mumbai


yes they can sell the loan. the assignment of loan is to be made only to a bank or institution approved by RBI as ARC.whether they assign or not its their discretion. you have the right to only be intimated if the loan is assigned or sold.you as a borrower cannot object,hope this solves your doubt.the bank buying the loan will approach DRT making application for substituting them in place of earlier bank by placing agreement on record.

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