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What action usually banks takes in case of loan default in Indore?

What action usually banks takes in case of loan default in Indore?

When a borrower defaults on a loan in Indore, banks in India can take various actions to recover the outstanding amount, depending on the severity and duration of the default. Here’s a breakdown of the usual course of action:

Early Stages:

  1. Notices and Reminders: The bank initially sends notices and reminders to the borrower informing them of the missed payment and urging them to rectify the situation.
  2. Late Payment Fees and Increased Interest: Late payment fees and increased interest rates are often implemented as deterrents and to compensate for the bank’s losses.
  3. Collection Calls: The bank may initiate collection calls to the borrower and their guarantors to negotiate a repayment plan or collect partial payments.


  1. Credit Score Impact: The default and subsequent actions taken by the bank will negatively impact the borrower’s credit score, making it difficult to obtain future loans.
  2. Legal Action: If the default persists, the bank can initiate legal proceedings against the borrower in the Debt Recovery Tribunals (DRTs) or civil courts. This can involve lawsuits, attachment of assets, or property seizure.
  3. Negotiation and Settlement: Even after legal action, banks are often open to negotiation and settlement. A DRT lawyer can be crucial in negotiating a feasible repayment plan or one-time settlement amount to avoid further legal proceedings.

Additional Actions:

  • Reporting to Credit Bureaus: The bank will report the default to credit bureaus like CIBIL and Experian, further damaging the borrower’s creditworthiness.
  • Blacklisting: In severe cases, the borrower may be blacklisted by the bank, making it impossible to obtain any loans from that particular institution.

Regional Considerations:

While the general actions mentioned above hold true for most Indian banks, specific procedures and timelines might vary slightly depending on the bank’s internal policies and local regulations in Indore. It’s advisable to consult a DRT lawyer familiar with the local banking landscape for specific guidance tailored to your situation.

Remember, communication and proactive efforts to address the default can help mitigate the severity of consequences and reach a favorable resolution with the bank.

Adcocate J.S. Rohilla (Civil & Criminal Lawyer in Indore)

Contact: 88271 22304

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