A person needs to meet a whole lot of criteria before taking up a loan from a bank. No matter which bank it is, the check list is almost the same for each and every bank. The first and top most term is that that the borrower needs to have an account with the lender bank with a certain amount of cash in it. Until and unless he or she has an account with the bank, the bank will not be interested in lending money to the person. This is due to a simple reason that the bank needs a security before issuing loan to a particular person.
In case of secured loan that involves in mortgaging property for taking up loan, the lender simply takes over the property and sells it in case the borrower fails to pay the EMIs and does not pay back the loan. But in case of unsecured loan, the bank has nothing to sell in case the loan does not get paid or there are miss outs on the EMIs. Hence, the bank takes out cash from the borrower’s account in order to fulfill the EMI or the interest amount.
There are a number of cases where loan defaults- bank can take your cash from account. It also depends upon the person’s reputation with the bank and how he or she has been paying the interest amount and the EMIs in the past. Though the lender keeps a complete check on the borrower’s background before lending the loan, there might be a scenario that the borrower has been very punctual in paying the amount to the bank and suddenly the default occurred due to some sudden accident or loss of job.
In such cases, the borrower must have a word with the bank or the lender and consult for further transactions. If the reputation of the borrower and past bank statements are good enough and the situation is real, the bank gives some extra time to the borrower to pay back the amount. But in case, there have been a continuous delay in paying the EMIs or the person runs away from paying it knowingly then the bank increases thee interest rate charged. They send notice to the borrower about the defaults and even then if the borrower does not pay the amount, the bank starts withdrawing cash from the borrower’s account in order to pay the EMIs.
They even send their representatives to the borrower’s address before doing so in order to make sure that the borrower is aware of the loan defaults and is still not paying the amount. Then there is the court’s notice that is sent by the bank in order to get a juridical solution for the loan amount to be paid. Hence, the bank has the right to take away cash from the borrower’s account in case the borrower does not take up the responsibility of paying the EMIs or the interests on time and has a loan default situation every month.