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NBFC V. Small Loan Borrower

Date of Claim raised:15/02/2022
Date of Conciliation: 23/02/2022
Date of Settlement: 23/05/2022
Digest: Mediation/Conciliation/Dispute/Claimant/Respondent/Invoice/Settlement
Case Summary

This case is a dispute between an NBFC and a small loan borrower. The Claimant is an NBFC who lent Rs. 1,00,000/- to a small borrower based on his salary for a tenure of 2 years. While the respondent paid his EMIs for almost a year and 3 months, he started defaulting on payments and made part payments to EMIs for the subsequent 6 months. There was an interest accrual on his account for a period of 9 months, and the dispute occurred when a total outstanding of Rs. 23,422/- was reached, and the account was deemed substandard.

The Issue

The claimant had lost his job and had to take up a smaller remuneration in his new job as a compromise, and he could not manage to pay all his EMIs. This issue was compounded by the fact that his wife fell ill and needed long-standing treatment. While the default was not willful and he did manage to pay part EMIs, the lender had no option but to tag the account NPA and proceed with litigation.

The Process

The negotiator, in this case, looked at the loan statement and the payment history, and after establishing the authenticity, he went ahead and discussed the issue with the respondent. The negotiator established that the respondent had a clear intention of settling the issue; thus, in consideration with the claimant, made the offer to waive all penal interest and allow the respondent three equal instalments to settle the outstanding.

Terms of Settlement

The respondent would be given a waiver of Rs. 3,422/-, and the amount of Rs. 20,000/- to be paid in 3 instalments of Rs. 10,000/- as the first and Rs. 5000/- in the next 2 consecutive ones. The final payment to be made on or before 16th March 2022.

The Inference

Human angle to the negotiation helped both parties to achieve an amicable settlement.