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Indian Law/Bank is asking for recovery form my employer for my personal loan

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Question
I have taken a personal loan form a nationalized bank, I paid the initially installments but could not pay the amount later due to financial crisis in the family. Now bank has sent a letter to my employer asking to deduct the installment form my salary. I want to know that-
1.I it legal to send this letter and can the bank ask for the money from my employer.
2.Can my employer deduct the money from my salary basis on bank’s letter?
3.I want to settle my loan account so can the bank waive off the interest and penalties and give me the time to re-pay the balance principle.
4.Can my job be effected because of this?
Need to your immediate help. Thanks!!

Answer
Beena: Thanks for your referral.

To answer to your queries:
1 & 2: Your employer is not bound to act on the bank's request, unless your employer has previously agreed to guarantee or pay the loan from your salary.
3: Please approach the bank without any delay and ask for some concession. My sense is the bank may grant you some waiver.
4: It depends on what view your employer takes. Obviosuly, you stand some risk. Suggest to dicuss with the employer informally and inform that you are in a dialogue with the bank to settle the matter and also convey that it is your personal matter and your employer is not bound to go by the bank's letter, unless your employer has previously agreed to guarantee or pay the loan from your salary.

Best regards.  

Indian Law

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Rajeev Dewal

Expertise

Indian Law relating to Banking and Financial Transactions. Kindly read instructions on "Ask the Question" page before asking a question. Kindly note that the replies here are by way of general information and not to be taken as legal advice nor the same form any client attorney relationship.

Experience

Over 20 years as In-House Counsel and banker with International, Private and Public Sector banks in India.

Organizations
Currently, Head- Legal, RBL Bank Limited, India (see web: http://www.rblbank.com/).

Education/Credentials
BSc, LLB, CAIIB.

Awards and Honors
University Prize- LLB Examination, Distinction- CAIIB.

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