Loan Taken in My Name for Company Use: Should the Company Repay It?

I am a full-time Director for the company, and I have been sanctioned a loan of Rs. 20 lakhs from a financial institute in my personal name. However, the loan is intended for the company's purposes, and the company should be held responsible for the repayment of the loan.

Dear,

If a loan was granted in the name of the company's director, then no company can accept the same loan from the director as per the Company Act of 2013.

Thanks & Regards,

Devesh Chauhan
Practicing in Accounts, Finance, Taxation, Labour Laws

Since you have taken a loan in your name, you alone are responsible for paying it back. The company cannot be liable to repay the same. They have all the right to refuse to pay, and the lender has no right to claim from the company.

Unless you own the company and fully control it, it is very dangerous for you to take a loan in your name for the business.

In any case, a company can no longer take a loan from anyone other than a bank or NBFC. It can take a loan from a director or shareholder only if the money being lent didn't come from any other person as a loan.

Regards

Loan was taken for what purpose in your name? Also, whether it was secured or non-secured? If secured, what was the security you offered to the financial institutions?

Although there are several such things you will have to make clear. So, would you like to clarify the above points? Mere a casual academic question cannot get an appropriate response.