My sons took out an education loan in 2005, and I’ve been making monthly payments ever since. I sent Rs 2,500 to the SBI account, but they only transferred Rs 1,610 to the loan account. They also charged me more than Rs 2,200 in fees. I raised this issue in 2010, but never got a response. I stopped making payments in 2012. I was asked to attend a Lok Adalat, where I offered to pay Rs 2 lakh (the outstanding amount was Rs 3 lakh). They refused my offer. Now they’ve transferred the loan to Reliance ARC, and they’re demanding full repayment. My loan was unsecured. Is it legal for them to transfer an unsecured loan to an ARC?

Apni Law
Apni Law
Law Forum › Category: Banking / Finance › My sons took out an education loan in 2005, and I’ve been making monthly payments ever since. I sent Rs 2,500 to the SBI account, but they only transferred Rs 1,610 to the loan account. They also charged me more than Rs 2,200 in fees. I raised this issue in 2010, but never got a response. I stopped making payments in 2012. I was asked to attend a Lok Adalat, where I offered to pay Rs 2 lakh (the outstanding amount was Rs 3 lakh). They refused my offer. Now they’ve transferred the loan to Reliance ARC, and they’re demanding full repayment. My loan was unsecured. Is it legal for them to transfer an unsecured loan to an ARC?
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Apni Law Staff asked 3 years ago

My sons took out an education loan in 2005, and I’ve been making monthly payments ever since. I sent Rs 2,500 to the SBI account, but they only transferred Rs 1,610 to the loan account. They also charged me more than Rs 2,200 in fees. I raised this issue in 2010, but never got a response. I stopped making payments in 2012. I was asked to attend a Lok Adalat, where I offered to pay Rs 2 lakh (the outstanding amount was Rs 3 lakh). They refused my offer. Now they’ve transferred the loan to Reliance ARC, and they’re demanding full repayment. My loan was unsecured. Is it legal for them to transfer an unsecured loan to an ARC?

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Best Answer

Apni Law Staff answered 3 years ago

Under Indian law, transfer of unsecured loans to Asset Reconstruction Companies (ARCs) is legal. While your grievance regarding the bank’s handling of your payments is valid, the transfer itself is permissible. Reliance ARC can now pursue full repayment of the loan, including accrued interest and penalties.

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