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My uncle retired from bank few years ago, now bank has filed a case against him as he sanctioned some loans and the customer turned out to be defaulter, how my uncle is liable for it ? what actions he can take ?
From India, Gurgaon
Dinesh Divekar
Business Mentor, Consultant And Trainer
Harsh Kumar Mehta
Consultant In Labour Laws/hr
International Corporate Trainer / Hr (od)
Retired Government Servant/advocate
Consultant Trainer In Insurance, Adviser
Insolvency N Gst Professional
Retired From Air India
+1 Other

Dinesh Divekar

Dear friend,

Has your uncle received summons from the court or just the lawyer's notice?

In what capacity your uncle worked in the bank? What was his designation? it appears that either of it has been sent out of malice towards your uncle or someone wants make him scapegoat. If the court's summons is received then nothing much can be done. He has to hire lawyer and defend his case. Now his lawyer needs to prove that the sanctioning of loan was misjudgement rather than wilful negligence.

When he was transferred to the loan department or credit department, did he sign any kind of documents?

In every bank the department that sanctions the loan is called as credit department or loan department. For assessing the creditworthiness of the applicant, bank must have prepared some checklist or SOP. Notwithstanding the SOP, whether to give credit or not depends on the judgement. Sometimes judgement can go wrong. However, how it far it is fair to hold individual response that remains to be seen! Secondly, was he the last person to scrutinise the loan application? What about audit department? How this non-creditworthiness escaped from their attention also?

In western countries or USA, board of directors appoint some outsider as Managing Director. Sometimes the decision proves disastrous. However, they are just sacked but not sued.

This is the tragedy of India. Persons like Vijay Mallaya can default payment of Rs 1,500 Crore and yet continue their swashbuckling or celebrate birthday bash with fanfare but a small employee or officer is sued.


Dinesh Divekar

From India, Bangalore

What post was your friend working?
Loans are sanctioned by bank following a due process.
No single person can sanction a loan.
The full facts of the loan sanction process will have to be examined and what role your friend played.
If case has been filed,then you have no choice but to hire an advocate and defend your position in the court.
After how many years did the customer become defaulter?
What was the bank doing when individual did not pay his instalments etc in time?
How many years have elapsed since your uncle sanctioned the loan and person has become defaulter?

From India, Pune
Work at Home Club

Can you please clarify the following points:
1) What exactly is the charge?
2) whether the charge is of civil nature or criminal nature
3) under what section of which Act?; and
4) How many of the retired or working employees have been made part of the charge sheet?

From India, Delhi

Divekarji, to add to what you have written, still banks write off crores of rupees at the behest of political parties, especially during election time. Loans are paid to the vote bank for frivolous reasons with the only objective of writing it off later. Most of the loans for farmers are fake.. given to chamchas.....
From India

I fully second Mr Sundaram.
If a legitimate businessman approaches for a loan-sans political backing etc-he will be given a loan after strict scrutiny and taking adequate security and surety.
But when other class of people apply all caution is thrown to the winds and eventually we tax payers are burdened with write off,capital infusions.Learned and highly paid bank employees will write thesis and give big lectures about some macro economic factor which lead to NPAS and then move upward on promotion.
It is the bank employee(higher level),finance ministry and neta crowd who have destroyed our banking system.
Our industries lack the skill to survive without permanent tax concessions,excise duty tweaks and captive market,protected by import duties.

From India, Pune

Sanctioning of loan by a bank is not an indivdual's decision but there are several checks and balances.Inspite of all care things may go wrong for an enterprise due to environmental factors undergoing sudden change.It can be physical , political , market any type of environment.Just the other day I was reading how millions of dollars were invested to make an amusement park which was hit by a severe cyclonic storm (rare in those areas) on the very day of inauguration and got practically washed away!Take the example of pager industry which got killed in its infancy due to rapid development of mobile phones.Was it the fault of managers sanctioning loan to a pager company ?Most important of all , will the bank bank share profits with your uncle for those loans which were sanctioned by him and which are regularly serviced by the debtors ?
From India, New Delhi

Any suggestion would depend on the present status of the investigation/proceedings. If the matter is still in investigation stage and there is real apprehension of being arrested, anticipatory bail could be sought. And if the matter has already reached the court and summons have been issued, the charges need to be met/dealt on merits.
From India, Kochi
Harsh Kumar Mehta

1. Sir, in my opinion, the retired bank officer can take help to defend his actions on following points, if applicable in his case:-

(a) That ( whether the defaulter has paid any installments, if any, has not been disclosed. Presuming that the default has occurred after payment of some installments) after sanction of the loan, the defaulter has paid so much installments. If he has become defaulter later on, then the loan sanctioning authority is not responsible.

(b) Since the sanctioning officer has retired since few years ( since how many years he retired has not been disclosed), hence the departmental action at this stage is time-barred. On this point help can be sought from the terms and conditions of employment (just like in respect of Central Govt. Employees where it is laid down that in respect of retired central govt. employees no departmental action can be taken after elapse of some specified time without the approval of Hon'ble President/Competent Authority).

(b) That the departmental action has not been taken against those junior officers(if there are any), who investigated the case for sanction of loan and made recommendations for sanction of said loan to the said retired Officer.

(e) That the loan was sanctioned strictly in accordance with the instructions of the bank as existed at the time sanction of said loan. In this connection, the said retired officer has to examine the instructions on the subject as were applicable at that time.

2. Further my above points are merely on presumptions and, in my opinion, every think will depend upon the facts of the case and what charges are leveled against the said retired bank officer.

From India, Noida

Dear Shri Harsh Kumar Mehta,
Your points are valid defences.
But then we are not aware of the circumstances and happenings which resulted in loan getting sanctioned and when it started becoming bad.
Is it clear that only one person is being chargesheeted/enquired into/proceeded legally etc??
Time bar will also be a good technical defence.
Poster has to give further details,presently he has posted but not responded to many queries by learned members.

From India, Pune
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