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Loan Tips: Those who do not pay the loan EMI also have rights, you should also know..

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Loan Default: One may have to take a loan. Be it a home loan or a personal loan, once you take the loan, you have to pay the EMI till the end of the term. If you are unable to pay the monthly installment of the loan i.e. EMI, then its immediate result is seen in the form of a penalty. However, its long-term consequences are also being seen.

If you feel that you will not be able to repay the loan amount on time, then you can take some preparatory steps at the very beginning. For example, you can increase the loan tenure, which reduces the EMI. Similarly, organizing your financial situation and restructuring the loan before finalizing the loan terms can also be very helpful. You can also request temporary relief due to a financial emergency, but you may have to pay a penalty.

CEO Manavjit Singh says that if you have not been able to take such a step or have not been able to repay the loan despite doing everything, then you should be aware of your rights as a loan defaulter. According to the law, the financial institution takes steps to recover the borrowed amount. However, lenders and banks have to follow the norms while doing so. Loan takers also have some rights which are important to know.

Right to be heard:
As a loan defaulter, you have the right to express your views or be heard. You can write a letter to the loan officer explaining the reasons for failure to repay the loan, especially if it is due to a job loss or medical emergency. Nevertheless, if you are not able to repay the loan amount and you have received an official notice from the bank, it is your right to represent the authorities with any objection to the rejection notice.

Right to contract terms:
According to Singh, the bank or any third-party recovery agent cannot harass or force the borrower to repay the loan amount at any time of the day. As per RBI guidelines, banks have to follow a code of conduct while outsourcing recovery work and appoint trained agents to handle customers with utmost sensitivity. They should be aware of the calling hours and the confidentiality of customer information. The time and place of recovery can be decided in advance, for example between 7 am and 7 pm.

Right to be treated like civilized citizens:
Singh says that it is your right to be treated like civilized citizens. If the bank/lender representative shouts or resorts to physical violence or threats then you can take legal recourse. The bank/lender will also have to share the details of the recovery agent with you. While visiting the agent, your privacy should be respected and he should behave in a civilized manner.

Right to fair value:
If you are unable to repay your dues and the bank has started the property auction process to recover the payment, you should receive a notice from the bank informing you of the same. It should also mention the fair value for the property/assets, details of the time and date of the auction, reserve price, etc. Your rights as a loan defaulter give you the right to object if the property is undervalued.

Right to balance proceeds:
If any excess amount is left from the money received after the sale of the property, it has to be returned to the lending institutions. Since the value of the property or asset can increase at any time, its value may exceed the amount you have to pay to the bank. Hence, it is important to keep a watch on the auction process.

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