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Personal Loan Guarantee against salary slip


26-Dec-2023 (In Banking / Finance Law)
In 2000 or 2002, one of my known person took personal loan from Co-op Bank and i stood one of guarantor out of three guarantor submitting our Salary Sleep. Today, i have received letter from said bank, that he has not paid dues and said account turned into NPA and we are in defaulter's list. Bank has written "We can contemplate legal proceeding to recover dues. However , to give one more opportunity, we have decided to amicably resolve the issue by considering concessions in the total dues under our KARZ -MUKTI YOJANA." I have retired 11 years ago and i don't have any income now. Second thing since 2002, Bank has never informed anything about this loan till this today's letter. Please advice me, should i meet Bank? Any thing i have to pay Bank? If not so how?
Answers (3)

Answer #1
574 votes
Dear Client, You were guarantor and liability shifts upon the guarantor is borrower stops paying the loan amount. As this loan was taken into 2000-2002 and you have recieved notice just now, it would be adviced to meet the said banker AND reply to this said notice through some advocate making your stand clear that you are not earning anything right now and you are not liable to pay anything from your end. Further, as this transaction is documentary based, precise advice cant be given, without the same. Kindly reach out to any of the empaneled advocates of LawRato, with all the documentary proof's, to discuss your issue in details. Regards, Expert Jurist LLP
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Advocate JV Bhosale

Adv. JV Bhosale

LawRato Mumbai | 400+ Answers
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Answer #2
943 votes
Greetings. you have provided your salary slip that purely shows that you have given assurance about the borrower and repayment of sum borrowed to the bank. all financial institutions always put their primary efforts to recover default amount from the borrower by necessary communication i.e. Telephonic/ Written. However when the borrower fails to meet the necessary requirements, the bank approaches to Guarantors. Yes bank can take legal action against Guarantors for recovery of its dues. you should immediately meet the concerned bank and talk in detail with the management. thanks.
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Advocate Bhakti Thakur

Adv. Bhakti Thakur

LawRatoThane | 25+ Answers
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Answer #3
512 votes
Any lender including bank can only go against the assets of guarantor when the borrower has failed to pay and not before hand. The bank should have exhausted all its remedies against the borrower. Home loans usually have 15 - 20 years period therefore in this case if the borrower has recently failed to pay then long period is irrelevant. The thing that needs to be seen is if bank has started action against borrower / guarantor 12 years after default of loan because that would not be tenable in the eyes of law.
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