Very important please reply legal terms of a housing loan

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

25 November 2013 Sir one of my relatives has taken a housing loan worth Rs.5 lakhs and in addition to keeping the property worth Rs.10 lakhs as security, the bank also demanded LICs/NSCs/KVPs worth Rs.1 lakh as security.

Now the money backs which are coming on LIC policies are being converted into Fixed Deposits and the Bank is keeping them.Is this correct?

Moreover some of my relatives NSCs have matured 4 months ago but the bank is neither giving the NSC document back nor are they atleast encashing it and converting into Fixed Deposit. They are just holding it and because of this my realtive is suffering from Loss of Interest which he could have earned.Is this legal?

PLEASE REPLY!!

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
Follow

25 November 2013 As far as FDR's are concerned, there is a marginal loss to the borrower which can be ignored.
.
However, in case of NSCs under lien, you can advise the bank to present these before the Postmaster for realisation and adjust the proceeds against the outstanding balance in the loan a/c.
.
Bankers are generally not taking care of the customers, but if we are giving them in writing, then a slight pressure can be created.
.

Nikhil Kaushik

Nikhil Kaushik (Expert)
Follow

25 November 2013 totally agreed with bafna ji. Also, it is advisable to write a RTI asking for the bank provisions for such liens. let them give u everything in writing

Upgrade to CAclubindia Pro. Subscribe Now!

Querist : Anonymous

Querist : Anonymous (Querist)

25 November 2013 Sir Can my relative not claim back his NSC and encash it himself without agreeing for adjustment with outstanding loan amount....

Moreover the bank is holding the LIC policies and also converting money backs into FDs. This is increasing the bank's security and if they return the NSC their security won't be affected. Also the Surrender Value of LIC Policies has also incraesed over past 4-5 years.

So are they not legally bound to return the NSCs or the LIC money backs?