Blank cheques for ECS against a loan of rs 200000 is legal ?

647 votes

This, I understand, is a typical bank procedure. If the ECS installment payment is unhindered, they may not use the cheques. However, in case there is a default in repayment, they may use the cheques to recover the dues and in the event the cheques, bounce, they can sue you under Negotiable Instruments Act besides suing for recovery for money. However, if the loan is cleared in due course without any hassle, you can always demand the cheques back from the bank. Hope you have kept photocopies of the cheques for your record.

Advocate Joydeep Nath LawRato

935 votes

The banks usually ask for these cheques, in case the account does to fulfil the auto debit option. Therefore the cheques act as an security for them. Its a usual practise and banks do not misuse them. In many cases the dates are mentioned on the cheques, so if the cheque is more then three months old and not deposited in any case it is a mere piece of paper.
Why would any bank institute a prosicution against you when you not done anything wrong within due course of law.

Advocate Shekhar Raj Sharma LawRato

961 votes

This is the process of the banks to keep some security with us un relation to loan. As you had given these cheque it should written in the agreement that i had provided the 10 blank cheques against the loan from the Banks . These cheque could not be used any of the transaction apart from the loan repaymmet if defaulted.
Else they can use for there personal benefits.
Adv Rajul Jain
Karkardoma court

Advocate Rajul Jain LawRato