Loan Unpaid, bank not bothered!

[pramodkumar]

I have a friend who needs some serious advice, he took a used car loan in 2006 for a tenure of 2 years 88K HDFC to be paid through ECS and a personal loan at about the same time for 3 years, 100k ICICI to be paid through cheques. He paid all his EMI’s on time till one year but after that he lost his job and emi’s were not paid. Now both the loan tenure is over and still no one had tried tracing him, he had changed states due to jobs, he tried paying the HDFC car loan in one shot but due to some hassles at the bank saying the NOC has to come from the branch he took the loan from etc. he didn’t pay. His car was a total loss in 2008 so doesn’t have it anymore, and I am not sure what he did with that. He was worried if at a later stage he might get caught and wants to pay off. Now the question is he applied a consumer loan for 30 K after all this and it got approved without any hassles from bajaj auto finance, my question is does all finance companies go through the cibil data base, if yes why wasn’t this guy traced. Second question is I have asked him to go talk with ICICI and HDFC saying he was out of country for 2 years due to some emergency work and is back now and wanted to pay his dues(will they verify this claim), is it a right decision. I am also worried if he just walks into the bank for paying back they might cause some troubles for him, regardless for the fact that he is ready to pay back. Please suggest.

Pramod

[amohit]

I am tempted to say forget it man. Just walk off. For a change ICICI has been duped
But then I guess that would not be the ethical advice.

By the way, if he wants to pay back his dues after a gap of 2 yrs, no bank will be even bothered to know where he was for this long.He need not give them any reason for not being able to pay. For them its a recovery without any efforts. He can even bargain for a lower closing amount. Banks will happily do it. After all its the dead money which they are getting back!

Regards,

[pramodkumar]

Thanks for the reply, there was close to 39 views and no replys.

I have told him exactly the same. This is what happened, after one year to non payment my friend decides to go to HDFC bank which was also the bank where he had his salary account. He narrates the entire issue to a recovery manager and tells them to see if they can give him a discount. he says he will get back to him and nothing happens. I spoke to my dad, he says banks file for bad debts every year so this amount must have gone in that. Dad said the supreme courts derictive to the bank is to go leagal way i.e notices from a advocate in case of default, since he changed his permanant address and state there is hardly a way in which anyone can trace him. the only drawback would be getting another loan in future, to that he said he already got one from bajaj auto finance. Now he is looking to buy a house for him, and he needs a loan so he asked me is there any risks involved, BTW his payment track has improved a great deal after that, he has almost completed a car loan through a private financer and his consumer loan is due to finish in march or april 2010.

Pramod

[aaggoswami]

This is real case with one of my best friend.

His father used to work in one major city. Lost the job because of health issue ( spinal cord surgery was required ). He had bought Zen on loan and the car is with a different regestration than Gujarat. The bank has not bothered to come in looking for the car or the human. They are yet to pay the loan, but they are using the car since long.
Currently they are ready to pay the money, but they are afraid of criminal case or bank demanding more money.

But as of now, dont be afraid, but clear the mess up. The mess might lead to issues in future.

[Bapu]

Hi,

My 2 paise.

Currently with all the issues being reported by the media about Recovery agents, many banks are going slow on that and following the legal path of notices etc.

However, this does not mean that they did not followup. As you say that your friend changed states, hence the notices might have been returned unanswered. Am not too sure if BAFL checks CIBIL.

If he wishes to pay the loan and clear his name, he shall have to go and specifically meet the Retail Assets Collections managers and not the branch managers in any branch.

These guys look specifically after the loans section and shall be able to work out a settlement.

If your friend needs any help with HDFC, let me know. I'll try and ask around.

And if and when he does settle - specifically ask him :

1 - To make the payment by cheque
2 - Cheque should be accompanied by a letter stating that this is a full and final payment
3 - Take a acknowledgement copy from the Collections Manager
4 - If possible, then get the collection manager to acknowledge that this is final payment
5 - Bank will issue a "Settlement Letter", which shall state that settlement has been done - This will be important incase of any future queries on the loan. Not too sure if this is immediate or sent later - if sent later - to keep written followup for the same.

Hope that helps...

[Pallavi]

Hi,

Before anything else, i would suggest your friend to send an email to the loan department with the loan account number and ask for the procedure and the amount required to close the loan. They will have a central database with which they can verify the loan status and the outstanding amount.

If he doesnt get any response after a week, he can go and meet Retail Assets Collections managers as suggested by Bapu.

-Pallavi

[pramodkumar]

Originally Posted by Bapu

Hi,

My 2 paise.

Currently with all the issues being reported by the media about Recovery agents, many banks are going slow on that and following the legal path of notices etc.

However, this does not mean that they did not followup. As you say that your friend changed states, hence the notices might have been returned unanswered. Am not too sure if BAFL checks CIBIL.

If he wishes to pay the loan and clear his name, he shall have to go and specifically meet the Retail Assets Collections managers and not the branch managers in any branch.

These guys look specifically after the loans section and shall be able to work out a settlement.

If your friend needs any help with HDFC, let me know. I'll try and ask around.

And if and when he does settle - specifically ask him :

1 - To make the payment by cheque
2 - Cheque should be accompanied by a letter stating that this is a full and final payment
3 - Take a acknowledgement copy from the Collections Manager
4 - If possible, then get the collection manager to acknowledge that this is final payment
5 - Bank will issue a "Settlement Letter", which shall state that settlement has been done - This will be important incase of any future queries on the loan. Not too sure if this is immediate or sent later - if sent later - to keep written followup for the same.

Hope that helps...

This is the exact path that i suggested him as well, but i have also read banks not removing names off cibil even after payment. My dad also said that legally they cant do much now as its a very long procedure, the only issue is home loan now. Do public sector banks look into cibil?


Pramod

[rg_chn]

Once he makes a payment, his name will be taken off cibil after 6 months.

[harry10]

My cousin is a manager in citibank.
He told me almost a year back that private banks mostly do not check with cibil for loan approvals.
Maybe the criteria has changed by now.

[rkbharat]

CIBIL is currently referred only for Personal Loan and New Credit Cards.

Banks are still not checking the history for car Loans and Home Loans.

I have a a long dispute going on with a bank for payment for 5000 Rs which they compiunded to 30K now. This was about 2 years back.

They added me into CIBIL. But not issue on Car Loan last year. 2 months back applied for Personal Loan, Citiank at the final step, came with the excuse of CIBIL history and canceled the loan, which I happily accepted as I was not desperate. Next day Executive called me and said, it was somebody elses name and not mine. I know it was mine. They did an extra personal check and issued loan.

But banks have started taking credit history seriously

[nutmello]

prudent ways
1. settle every loan account , till last paisa, negotiate and bring down the amount but PAY.
2. CIBIL - is referred by every banker for EVERY LOAN. apply directly to CIBIL and get a copy of your account. if any issue talk to your banker and get it corrected.
3. credit history - is very important till we die. which ever part of world you go, every banker will get access to CIBIL. it will be very difficult then.
4. after all whose money is it? - never think of running away from such things. its a little cowardly. talk and settle, after all we are humans.
5. lastly have a great track record. it helps.
6. fnally never buy depreciating assets on loan.

[wildon]

Because this is ICICI and HDFC i recommend this if you are willing to pay back.

1. Contact the Bank (Not from your Residence phone/Office phone/ Post paid mobile phone)

2. Don't give cheque's from your ICICI and HDFC account for the settlement amount as if they come to know your account details they may freeze your money.

3. As this is a dead money for the bank you will get a major discount for the outstanding, and its depend upon your bargaining power.

4. Don't show your eagerness to pay back the money to the bankers, this will help you getting a good discount (it should be like i have some money if you are interested take it, but i have only this much)

[deepakchiniwal]

Hello Pramod,

There are two ways I look at it.

1. Be least bothered of what the banks do, since he has already changed the Permanent Address its difficult to trace back. I am saying its not impossible. Enjoy with the money now.

2. To get off the guilt feeling, Call their customer care, get the outstanding details. Walk in to any branch of the bank. Make the payment at the counters. Take the acknowledgment and stay mum for 2 weeks. Post that start following up with bank for NOC and other letter formalities.

As far as the CIBIL is concerned, All banks registered under RBI are supposed to verify the records before any new loan dispersal. Be it a Home Loan, Car Loan, Site Loan, Credit Cards, Personal Loan and any sort of loans.

As far as Bajaj is concerned, its a private lender.

Considering the fact that your friend is looking for home loan sooner, he will get into trouble.

[deepakchiniwal]

Originally Posted by wildon

Don't give cheque's from your ICICI and HDFC account for the settlement amount as if they come to know your account details they may freeze your money.

The banks do not have the authority to Freeze the money. However the fine print of Terms and Conditions will have a term saying, Bank is authorized to debit the outstanding from the savings account in the event of Defaults.

Accounts can be freezed only if there is a order from the government, ruling by the court, complaint by the Police authorities. Otherwise its not easy to freeze accounts.

Originally Posted by wildon

3. As this is a dead money for the bank you will get a major discount for the outstanding, and its depend upon your bargaining power.

4. Don't show your eagerness to pay back the money to the bankers, this will help you getting a good discount (it should be like i have some money if you are interested take it, but i have only this much)

Banks give discounts when you are paying it back. However be informed that the banks are not charity organizations. They need to pay salaries and operational costs etc. They report this to CIBIL stating its a settlement / Written off account. Which still means you have defaulted. CIBIL records will continue to maintain this, unless they get instructions from bank.

Loan Recovery dept is different from Records Management Team (reporter to CIBIL), and unfortunately both these teams never work hand in hand.

Oh Yea!, PS I am not an Employee of any Bank

[funkydude]

Very much agree to what every one has to advise.

1. Pay off your loan and get a peace of mind.
2. You can always be traced for any illegal activity.
3. You might have to pay extra charges for not paying the due on time. Settle this with the bank and make sure to prepare one good excuse before leaving for the bank.

Do let us all know the outcome.