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loan guarantee by government servant and liability
02-Aug-2023 (In Banking / Finance Law)
Sir I am central govt. Servant. I have given loan guarantee to some of my colleagues working in my department. They are also permanent employees. I have given loan guarantee towards loan taken from a registered credit & thrift society in which we all are members. Sir what will be my responsibility if any one of them die or not pay or stop paying loan instalments. They are govt servants do any laws empower my office to recover outstanding loan taken from bank or credit & thrift society. Which procedure banks or credit & thrift society follows for recover of any loan given to central govt. Servant ?? Grateful to find platform to ask my doubts..... thanks for reading
The liability of a guarantor is co-extensive with that of principal borrower. Your liability for the said loans, as a guarantor, is the same as the borrower . If any of the borrower defaults the creditor has a right to proceed against you for recovery of its outstandings. If a principal borrower dies, and the loan happens to be insured, insurance company will settle the loan in accordance with the terms and conditions mentioned in the insurance contract. If a loan is from a bank, it shall proceed in cases where the outstandings are less than 10 lakhs by filing a suit for recovery before a civil court and in cases where the outstandings are above 10 lakhs, by filing petition under section 19 of Recovery of Debts and Bankruptcy Act, 1993 before the concerned Debt Recovery Tribunals. If you have created a security in property, banks can also initiate SARFEASI action, in terms of SARFAESI Act, 2002. Portion of your salary can be attached in execution of a decree or a recovery certificate, as the case may be.
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Adv. Gaurav Srivastava
Delhi | 25+ Answers
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