*TWO-WHEELER FINANCE
I want to know about bike finance. What are the conditions and procedure for applying for the finance, time period and rate of interest for the same?
(Owais Gani Sheikh)

 Banks have consumer loan scheme in place to extend loan facility for purchase of motorbikes, scooters etc. However, J&K Bank has tailored a special scheme to finance two-wheelers. The scheme is open to government employees, professionals or self employed individuals / Businessmen, employees of private companies or reputed establishments etc. Employees on Adhoc basis shall not be eligible. Employees on contractual basis in Government/Semi-Government Undertakings, Autonomous bodies & Public Sector Undertakings shall also be eligible, if they have been in current contractual job for a period not less than I year and the remaining contract period is longer than the chosen repayment period. The scheme is open even for students, aged 18 years and above, with parent as co-borrower. Another condition is that the borrower’s minimum net annual income should be Rs.50, 000.
 If you fall under any of the above mentioned categories, you can apply for the loan. Maximum loan granted under the scheme is Rs.1.00 lakh or 12 times net monthly salary/income, whichever is lower. You have to obtain sales invoice from the dealer in which full value of the motorbike which you intend to purchase is mentioned. However, you have to bear a margin of 10 to 25 per cent of the cost of the motorbike.
 The loan facility shall be granted primarily against the hypothecation of the two-wheeler to be purchased. Besides, collaterally you have to give third party guarantee of one person if the loan amount is Rs.50,000 and guarantee of two persons beyond this limit. However, no third party guarantee is required if you are a government employee drawing salary through the bank and where letter of confirmation from employer for deduction of monthly installments is available.
 The loan is available at 11.25 per cent for a repayment schedule of less than three years and 12.25 per cent for repayment schedule of above three years. Notably, the loan is to be repaid within five years (60 monthly installments).
 
*MORTGAGE OF HOUSE ISSUE
Some 5 years back, my uncle obtained a loan of Rs. 10 lakhs from ICICI bank against the mortgage of our residential house. The mortgaged house is in the name of my mother. We have been informed by the bank that the account is in default and the balance outstanding in the account is Rs.9.5 lakhs. We approached our uncle to liquidate the outstanding loan, but he is showing no signs of repaying the outstanding amount. My mother received a shock when the bank informed about the default. She is currently on dialysis as her kidneys failed due to the shock. I am only earning member of my family. I tried everything to convince my uncle to clear the liability, but he is adamant not to repay the loan. Is there any remedy to get our mortgaged house free from the bank liability?
(Jasmeet Bhatia)

 In the facts and circumstances of the case, ICICI bank can take up proper proceedings for recovery of the outstanding amount with interest thereon. This recovery can be enforced through sale of mortgaged property as well. The bank has an option of invoking SARFAESI Act or filing a recovery suit. Under the SARFAESI Act, the creditor can give a notice to the defaulting borrower after the account is declared NPA. The notice calls upon the borrower to repay the loan with interest within a period of 60 days. In case the borrower fails to do so further action under the act can be taken for sale of the mortgage of property.
 Let it be clear to you that the liability of the guarantor is joint and coextensive with the debtor and he is equally liable to pay the outstanding amount with agreed rate of interest thereon. Under law the creditor can proceed against the guarantor straight away without exhausting its remedy against the principal borrower. Such action of the creditors has been held to be valid by various courts including the Supreme Court.
 So under the given circumstances, there is no option for you but to motivate your uncle to repay the outstanding loan. Otherwise, the bank has the legal mandate to recover the loan amount through sale of your mother’s house which is mortgaged to the bank.

(The views are of the author & not the institution he works for)
Readers can send their queries to sajjadbazaz@gmail.com,  sajjadbazaz@greaterkashmir.com)

Lastupdate on : Sat, 22 Jan 2011 21:30:00 Makkah time
Lastupdate on : Sat, 22 Jan 2011 18:30:00 GMT
Lastupdate on : Sun, 23 Jan 2011 00:00:00 IST