Consumer Durable Loans

CONSUMER DURABLE LOANS (SALARY/NON SALARY EARNERS)

Scheme for Granting Loans to Individual Salary and non-salary earners by the state and central cooperative banks for socio-economic needs

The bank may grant loans to individual salary earners and non-salary earners holding saving bank account or current account with the bank for purchase of consumer durables and meeting other socio-economic needs.

(amended vide RCS Circular letter No.Credit/CA-2/4CL/86/ 14920 dated 11.10.07)

The loan should be repayable in monthly installments but the total duration of loan should not exceed five years in any case.
The borrower should be enrolled as a nominal member of the Bank. The Borrower should be required to produce 2 sureties who should also be nominal members of the Bank.
In case of SALARY EARNERS, the amount of loan should not exceed Rs.1.00 lac per borrower or 75% of the cost of article to be purchased whichever is less, in accordance with the slabs fixed hereunder:- Total  emoluments upto Rs.5000/-                            - Loan Amount = Rs.25000/- Total  emoluments from Rs.5001/- to Rs.7500/-       - Loan Amount = Rs.40000/- Total  emoluments from Rs.7501/- to Rs.10000/-     - Loan amount = Rs.50000/- Total  emoluments from Rs.10001/- to Rs.15000/-   - Loan amount = Rs.75000/- Total  emoluments above Rs.15001/-                       - Loan amount = Rs.100000/-

            In case of NON-SALARY EARNERS, the amount of loan should not exceed Rs.50000/- per  borrower or 75% of the cost of article to be purchased in accordance with the slabs fixed hereunder:-
Half Yearly Income                                                       Amount Loan
a)  Up to Rs.18000/-                                                        Rs.15000/-

From Rs.18001/- to Rs.27000/-                                 Rs.25000/- From Rs.27001/- to Rs.40000/-                                 Rs.30000/- More than Rs.40001/-                                                Rs.50000/-

For category (d) copy of previous year income-tax return is essential.
(amended vide RCS Circular letter No.Credit/CA-2/4CL/86/ 14920 dated 11.10.07)

The loan should be advanced for acquiring new assets only. Purchase of second hand articles should not be financed in any case.

(Amended vide RCS Circular letter No.Credit/CA-2/4CL/86/ 6910 dated 02.05.08)

The bank should obtain salary certificate from the borrower. The borrower himself should be responsible for the repayment of his loan. However he should also produce a copy of authority letter addressed to the bank and also an undertaking to the effect that in case borrower commits default in repayment of his loan installments, then his salary or loan amount due will be credited to his loan account till the bank directs to do so. The bank shall inform the employer immediately after the sanction of loan.

(amended vide RCS Circular letter No.Credit/CA-2/4CL/86/ 14920 dated 11.10.07)

In case of default by the borrower, the bank will ask the employer of the borrower to deposit the due amount by deducting from the salary of the employee.

(amended vide RCS Circular letter No.Credit/CA-2/4CL/86/ 14920 dated 11.10.07)

The borrower should give standing instruction to debit the amount of installments or overdue installments together with interest due on that loan every month to his saving bank account or current account as the case may be.

(amended vide RCS Circular letter No.Credit/CA-2/4CL/86/ 14920 dated 11.10.07)

The bank should also obtain the following documents from the borrower :- Salary certificate/proof of income Loan agreement. Demand Promissory Note An authority letter from the borrower under Section 39 of Punjab Cooperative Societies Act, 1961 for repayment of loan in case the borrower fails o repay the loan. An authority letter from the borrower to recovery the installment/interest by debiting to saving/current account. Letter of waiver. Post dated cheques equal to number of installments should be obtained from the borrower.

(amended vide RCS Circular letter No.Credit/CA-2/4CL/86/ 14920 dated 11.10.07)

The payment of loan shall be made direct to the borrower. He shall utilize the loan within one month and submit the cash memo/receipt of the goods purchased. In case the borrower fails to submit the same, he shall be liable to refund the loan in lumpsum and shall also pay penal intt. @ 3% p.a. over and above normal rate till the liquidation of loan.
The loan should be advanced against hypothecation of the asset/assets acquired/to be acquired, if any.
Rate of Interest shall be as fixed by the Bank from time to time with quarterly rests. Penal interest  @2% shall be charged on the default amount for the defaulted period.

(amended vide RCS Circular letter No.Credit/CA-2/4CL/86/ 14920 dated 11.10.07)