Failure To Repay Mudra Loan

Failure To Repay Mudra Loan

If you want to know the complete information on the failure to Repay the Mudra loan, read the complete article. As you know the importance of getting the PMMY Loan scheme is high at this time so you can get the timely` and less expensive financial help from the banks and financial institutions. This helps the new emerging businessmen to arrange working capital and establish new business units.

The government has done this great favour for the individuals in India so that they can become self-dependent. The applicants can get the PMMY Loan to start small and micro business units and earn their living.

The Mudra Loan offers affordable loans operating through a credit guarantee Trust for Micro and small enterprises. The loans are therefore provided to the SME owners so that their fund requirement is fulfilled. Thus they can buy their machinery or expand their business.

They can even use the amount of the loan as working capital. Well, the formality of the Mudra Loan is not complex. The interest rate is also affordable. Thus you need not pay more interest to the lending bank.

The loan is provided by both private and public sector banks. The internal process is carried out with full concentration. This helps the banks to stay alert to past defaulters. The borrower who is in a position to repay the loan and has completed all the formalities satisfactory can get the loan.

The borrower must be in a condition to repay the loan otherwise his loan application is rejected by the bank.

For More Information Read: Mudra Loan Scheme Purpose, Features, and Offerings

Failure To Repay Mudra Loan

There is always a condition that is stated before the borrower in writing by the bank regarding the repayment of the Mudra Loan. The loan is sanctioned on the terms of repayment if agreed upon by the borrower. If still the borrower is unable to repay the loan, the lender can persuade him to repay it.

The importance of a low credit score is told by the lender to the borrower. If you are the one who is not in a position to repay the Mudra Loan that you got from the bank, the best thing is that you can approach the bank and convey it to the lender. Maybe they provide you relief from repayment of the loan for some time and by then you can arrange money to repay it.

For More Information Read: Project report for Mudra Loan

Who is a Mudra Loan Defaulter?

Anyone in India who has taken a Mudra Loan from any Indian bank or financial institution and is not able, can’t or is ready to repay the loan amount is a defaulter of a Mudra Loan. In the below article, you can check out the legal penalties that the bank can levy on the loan defaulter in India.

What are the legal actions against Mudra Loan Defaulters?

After giving you continuous reminders, the bank or the lender can take legal action against you. First, they call the guarantor and ask him to make the loan payment. Secondly, they prompt you again and again to repay. Once you don’t pay for three months, the bank starts legal proceedings and can later seize your possession.

What will happen if I can’t repay the Mudra Loan?

Once you get the Mudra loan, it is ethical to repay it to the bank in the decided tenure. The maximum tenure is 5 years. Your loan tenure has been decided by the bank and you. So it is your responsibility to pay the bank the instalment timely.

The bank is offered a credit guarantee for its safety that is between 50 to 85% of the loan amount. Still, the bank tries to recover the loan amount from you. If you are not able to pay back the loan, the banker can follow the following protocols.

  • The loan account is taken as NPA which is a non-performing asset and you become a bank defaulter. The bank has the right to sue you or take any legal action.
  • The business asset that you bought from the loan is seized. The bank can later sell it to recover its money.
  • The guarantor is called by the bank and told to repay.
  • Your Cibil score is reduced and no other bank is ready to give you a loan. The borrower’s name is communicated to the credit score agency and you can find it difficult to get a loan in future.
  • Be cautious when it comes to repayment of Mudra Loan. When you are not in the condition to repay the loan or face a slump, communicate this to the bank and look for some solution with the banker. He will help you reduce your EMI or will give some other solution to help you.
Frequently Asked Questions on Failure to Repay Mudra Loan

What happens If I miss a loan payment?

If you miss the loan payment, you can pay it later at the end of the month as soon as you arrange the money. If you are not in the condition to pay the installment then inform the banker. He will provide you with some relief. If this period exceeds three months, the bank starts legal proceedings against you.

What happens if I can’t pay my bank loan?

If you can’t pay your bank loan, the bank after warning and continuous reminders can seize your property.

What happens If I fail to pay my mortgage?

If you fail to repay your mortgage, you must ask for some relief from the bank and pay it as soon as you arrange the money. If you are not in a position to pay back your loan, the bank can take away your possession from you.

What happens if a borrower from a Mudra loan dies?

If the borrower of the Mudra Loan is no more then the guarantor is asked to repay the Mudra Loan and if the guarantor is not in the condition to pay it back, then the family of the borrower pays the loan amount otherwise the bank may seize your property.

What happens if a person fails to pay Mudra Loan?

If there is a failure to repay the Mudra Loan and it exceeds more than 3 months, then the banker begins legal proceedings against you. Overdue charges and default interest becomes a burden on the borrower and the bankers share your information with the credit bureaus which affects your credit score also.

What is the punishment for Mudra loan Defaulters?

Mudra Loan defaulters are given some relief in the beginning but if this period extends the limit, the lender can punish the borrower by suing him or can even seize his property.

What legal action can be taken against Mudra loan defaulters can cheques be bounced and 138 be used?

Of course, the proceeding can take place. When 138 is used, the borrower is forced to arrange funds or the property is seized.

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