Foreclosure Charges on Loan Against Property with a proprietorship firm

POSTED BY Vikz ON September 21, 2014 10:43 pm COMMENTS (14)

Dear Friends

I have availed a Loan against Property (Term loan with floating interest rates) from a ‘Private Housing Finance Ltd’. For the Loan, myself is the Borrower and my proprietorship firm has been made the co-borrower. Now for closing the Loan against Property account they are asking for Foreclosure charges upto 5.65% claiming that in my case “Firm” is a Co-borrower.

Kindly clarify whether the term ‘Firm’ in the above cited circular also includes ‘Proprietorship Firms’ also, since both the borrower and the co-borrower are ‘individual borrowers’ having no separate legal existence as in the case of a Company or Partnership Firm. Kindly issue a clarification for the same and kindly advice me on how to redress the grievance.

14 replies on this article “Foreclosure Charges on Loan Against Property with a proprietorship firm”

  1. gunjan says:

    I have availed a Loan against Property (Term loan with floating interest rates) from a ‘Private Housing Finance Ltd’. For the Loan, myself is the Borrower and my proprietorship firm has been made the co-borrower. Now for closing the Loan against Property account they are asking for Foreclosure charges upto 5.65% claiming that in my case “Firm” is a Co-borrower.

    Kindly clarify whether the term ‘Firm’ in the above cited circular also includes ‘Proprietorship Firms’ also, since both the borrower and the co-borrower are ‘individual borrowers’ having no separate legal existence as in the case of a Company or Partnership Firm. Kindly issue a clarification for the same and kindly advice me on how to redress the grievance.

    1. I think you need to get the agreement checked with a lawyer . Its a legal issue . Not personal finance

  2. Ranjeet kumar jaiswal says:

    I have availed loan against property from HDBFS.l being the proprietor and my father, mother, wife is co applicant.l want to foreclouse the loan,the loan is in floating rate.The bank is charging 4.58% foreclouser charges.
    Kindly suggest me ,what to do

    1. If its as per terms and conditions, you need to pay that !

  3. sukoon says:

    For all legal/ technical/practical purposes, the proprietor and the proprietorship concern are treated as one and single entity. Even PAN is not separately required for the proprietor & the proprietorship concern unlike Partnership firm and the company.
    Thus, we understand that the foreclosure chrges on part prepayment/ full prepayment shall not be applicable in case of proprietorship concern , despite being a co-borrower , if the loan is on floating rate of interest

    1. Hi sukoon

      Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also

      Manish

      1. somnath says:

        i being a retail asset banker to many pvt banks and nbfcs want to clarify as per rbi an individual or a propeitor is treated as the same ….so one taking a loan in dis structure is not applicable in paying foreclosure charges ….if ny organisation is charging plz go for legal

        1. Thanks for clarifying that !

    2. jaysingh says:

      Dear Sukoon
      pls tell me if propriter ship firm is main applicant and paying emi in firm a/c & all individual is coapplicant, then for closure charges is applicable or not, Bank is demanding 4% charges as per sanction letter.

  4. Ashish gupta says:

    I have exectly the same case . I went to RBI and submitted my consern . Month latter Letter from RBI said that propritership firm is not an individual borrower .
    But i have heard , many RTI are being filed for this matter , and forclouser can become 0% in case of propritership firms

    1. KunalJain says:

      Did you get anything over the rti you are discussing..

    2. Ankit Aggarwal says:

      Can u please share the letter on annkkiittagg@gmail.com

    3. Vaibhav Sethia says:

      Hi Ashish, I am suffering in a similar case. Please share the RBI letter and RTI reply if any at vaibhav@magnumgroup.in. Thanks.

    4. Jana says:

      Sir pls you can send me that letter they charges my friend 5% based on proprietorship authority letter he has taken loan on individual name only but they charging closer charges pls
      janarthanan81.jr@gmail.com

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