Thursday, November 24, 2011

Query Corner: Banking & Finance

- Economic Times

Auto Debit

Can a bank auto debit money from your savings account towards dues of credit card without sending notice to customer?-SATNAM HUNDAL

Bankers have a right of lien and set-off. Set-off means the bank can adjust the credit balance in a customer's account against a debit balance in another account of the customer. The deposit and loan should be due and lawful (law of limitation does not apply). There is no need to send any notice. In fact, the banker must have sent notice when the account was in default.


FD Nomination

My father-in-law had a fixed deposit with a cooperative bank. This was renewed last year. Before renewing it, he had registered my wife as nominee. He passed away last year. We approached the bank for withdrawing the amount, but it said when the FD was renewed, the earlier nominee was not changed. It asked us to submit an indemnity bond with myself as surety. We submitted the bond. But, inspite of this, the bank is not settling the account. What should we do? - NATARAJAN

If the FD was renewed without any changes, the earlier instruction would have remained valid. Anyway, if the bank is not taking steps to settle the account even after you have completed all the formalities as required by it, you can send your complaint to the customer service department of the Reserve Bank of India.

Property Taken By Bank

I am based in Ahmedabad. My son had taken a loan from a nationalised bank for his business. Due to heavy rains in 2000, his business was ruined. He gave the bank a proposal in writing to pay back the loan. But the bank turned down the offer. We told them we will not give them the property that was mortgaged unless there was a court order. The bank went to court. But, before the court could pass a verdict, the bank's officials threw me out of my house. They did not do any panchnama, nor make any inventory of my movable property. My son's account has not been declared as NPA (non-performing asset). As per RBI guidelines, mortgaged property can be seized only after declaring a loan as an NPA. The bank, without any court order, took possession of three of our properties mortgaged with it and later sold them. The cases are still going on. Does the bank have the right to take away the property without declaring the account as NPA and without a court order when a case is on? - DR URMILA H PATEL

A nationalised bank will not venture to remove someone without a reason. Under the SARFAESI Act, 2002, banks have the power to take possession of property without the intervention of a court. However, before taking possession and also disposing it of, certain formalities need to be completed, such as giving notice, classifying the account as an NPA, etc. Where the borrower does not give peaceful possession of the property, the bank can approach the district magistrate and procure an order for forceful eviction with the help of the police. Your case, if it is not according to the laid-down procedure, needs an examination. You can approach a credit counsellor. Full details of such centres, if any, at Ahmedabad are not known. However, Bank of Baroda has a centre at Baroda. Alternatively, you can approach a lawyer to find out whether the bank's action was correct.

(VN Kulkarni, Chief counsellor, Abhay Credit Counselling Centre, a Bank of India-backed initiative)

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