Loan Recovery: At present, loan is required to fulfill many needs. People take loans from banks for house, business, car etc. and repay them with interest. Any bank checks the financial history of a person before giving a loan and gives the loan only after being completely sure. If a person taking the loan dies, then this situation becomes very complicated for the banks also. Here we will know how the bank makes recovery in case of death of the person taking the loan.
Bank can seize and sell the property of the deceased
According to Tata Capital, if the person taking the loan dies, then in such a situation the banks first contact the co-applicants of that loan. If the loan co-applicant is also unable to repay the loan, the bank contacts the guarantor, family members or legal heirs of the deceased and asks for timely repayment of the remaining dues. If any person is unable to repay the loan, then the banks can seize the property of the deceased and recover the outstanding loan money by selling it.
This one step can be effective to deal with the worst situation.
In situations like home loan and car loan, banks purchase and seize the vehicle. Later an auction is organized to sell this house and car. Banks recover their loan after the property is sold in the auction. Apart from these, in any other loan, the bank borrower can also seize other properties of the deceased and sell them. Such a situation becomes very bad for the borrower’s family. Therefore, people should try to get term insurance for themselves for at least Rs 1 crore. So that in case of death, the loan can be repaid from the money received from term insurance.
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