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Thread: can bank keep a blank cheque as security

  1. #1
    Rajesh_s Guest

    Default can bank keep a blank cheque as security

    Dear Group members

    I have taken a home loan from ICICI bank. The bank has kept one
    signed cheque as security deposit. I have been informed that if there
    is default in EMI, bank will deposit the said cheque for full loan
    amount, which will definitely be dishonored since a common man does
    not have such huge amount in the account. Thereafter they will file a
    case under negotiable instrument Act and then proceed to auction the
    flat under Securitization Act.

    In case of default, auction of flat under Securitization Act to
    recover the loan amount is understandable but whether these banks
    entitled to keep a blank cheque as security. If not, can I ask them to
    give me back the said cheque? Whom should I write to ?

    Rajesh

  2. #2
    Unregistered Guest

    Default

    Dear Rajesh

    I was earlier working for a finance comoany and we used to take not one but 12
    blank cheques. Every time there would be a default we would present a cheque to
    file a case of cheque dishonour which is a criminal offence.

    I believe the bank is within it's right to keep a blank cheque. However the
    bank should also acknowledge to you in writing the conditions under which the
    blank cheque will be used. The bank should also confirm that in the event there
    is a misuse of the cheque they will compensate you for losses.

    Once you have gotten a letter as above from the bank there should be no
    worries as long as you have an honest intention of clearing the banks loans on
    time

    Best Regards

  3. #3
    Unregistered Guest

    Default

    The Bank has no legal right to keep a blank cheque as security.if it
    has done with the consent and knowledge of the account holder the
    Account Holder has all the legal and moral right to instruct his
    Bank to stop payment, before it is presented, by giving it in
    writing his intention to stop payment of cheque.Even under the
    negotiable instruments act if stop payment instructions are given to
    the bank no criminal action can be initiated. The Bank already has a
    Agreement, Undertaking and two guarantors who guarantee that the
    Loanee will pay the loan.So a blank cheque is invalid
    document.Liable to be returned uncleared when presented for
    payment.Still get hold of a good Lawyer and brief him in advance
    about this.Take his legal opinion and if he suggests file a
    N.C.,/F.I.R.,at the local Police station.(Local means where the bank
    is situated) against the bank for forcing you to sign a blank cheque.

  4. #4
    Unregistered Guest

    Default

    Any business of blank cheques is illigal. Just like taking a peper with blank
    signatures

    m.m.sethi

  5. #5
    Unregistered Guest

    Default

    Hi Rajesh,

    Banks do keep blank cheques as security against loan so they don't have to run
    behind your guaranteers for youe defaulted payments.

    Typically, the bank will deposit a cheque in case your 3 EMI's are missed.
    (This is NOT a rule and could vary from bank to bank!)

    In case you are going for a 12 month loan, you are asked to give 4 blank
    cheques.
    As a prudent citizen, you should write on the cheque "NOT MORE THAN Rs. XXX"
    where XXX = emi x 4 months

    While I wholeheartedly agree that giving blank cheques is scary, esp. to goon
    banks ...fact remains in today's world we'd personally think hard before loaning
    even 500 rs. to someone we know. And the bank loans us respectable amount which
    they have to recover!

    Cheers,

  6. #6
    Unregistered Guest

    Default Blank cheques for ECS

    My bank is also asking me to issue them 7 blank cheques for using ECS facility. Is it that banks discourage consumers to use ECS facility? The general rule of a banker is always issue a cheque with a date and amount wriiten.
    Then how can a bank ask for undated blank cheques. Is this part of any banking rules to take blank undated cheques from customers?
    Is this acceptance of blank cheques by banks has the consent of RBI? Almost every bank asks for balnk cheques. Will any bank themselves issue any blank cheque?

    What does the law say on this? OR Does this happen only in India?

  7. #7
    Ramesh Vashsitha Guest

    Default Issue of Notice under Sec. 138 of NI act. 1988 missusing 'The Blank Cheque'

    Qs.1 Can the bank misuse 'The blank Cheque' taken against the bill or wishes of the loaning who availed personal loaanding n during emergency of exegencies period to meet his domestic requirement due to five succsessive deths of five members in near relation or in family. If so can the bank fill whole outstating loan amount in 'The Blank Cheque' to claim debt?

    Qs.2 If bank is not legally authorised to misuse 'The Blank Cheque' then what action can be taken against nationalised bank under the Indian Law? Can Loanee claim damages or F.I.R. against bank which has issued notice to the loanee under section 138 of NI act 1881?
    'Facts of the Case' I availed Rs. 1Lac. as personal Loan & deposited some portion of loan in installments. Later, bank misused my blank cheque putting entire outstanding loan amount getting dishonoured it from its branch, issued notice undersection 138 directing to pay the cheques amounts within 15 days if I do not deposit the amount it will be a criminal offense kindly guide me further action immediately.
    Thanks
    Mr. Ramesh Vashishtha,Hisar

  8. #8
    brian nathaniel soans is offline Senior Member
    Join Date
    Nov 2010
    Posts
    362

    Default

    Prosecution ruled out in blank cheque bounce cases
    Saturday, Feb 20, 2010 at 0139 hrs IST
    Bombay High Court | Law And Order | Blank Cheque Bounce Case

    The Bombay High Court has held that if a blank, post-dated cheque—which has been issued only as a ‘collateral security’ for a loan—bounces, the debtor cannot be prosecuted under the Negotiable Instruments (NI) Act.

    for further clarifications: call : dr.b.n.soans at 09245201687
    Very often banks take blank, post-dated che-ques from borrowers as a security for repayment. Criminal case under the NI Act cannot be lodged if such cheques bounced, Justice PR Borkar held in his judgement last week.

    The judgement could be a jolt for private banks, but public sector banks wouldn’t be affected by it, says MR Umarjee, chief legal advisor, Indian Banks’ Association. “I don’t think the Bombay HC judgement will have any implication in the case of state-owned banks, as they don’t ask for such blank cheques from their borrowers. Yes, those banks that ask for blank cheques may be affected by this judgement.

    Other bankers contacted by FE refused to comment on the development, saying they have not gone through the judgement.
    The judgement was passed on a petition filed by Ramkrishna Urban Cooperative Credit Society (RUCCS) in Ahmednagar district.

    RUCCS had given a loan of Rs 2 lakh to a person named Rajendra Varma in 2000. Varma had issued 10 blank post-dated cheques at the time as a security for repayment.

    One of these cheques, dated January 2008, bounced following which RUCCS filed criminal complaint against Varma. However, the magistrate's court held that Varma was not guilty under the NI Act and acquitted him. The society filed an application in Aurangabad bench of High Court seeking its permission to file appeal in sessions court.

    The High Court noted that the NI Act was intended to give more credibility to cheque as a financial instrument; “However, the object was not to provide effective and speedy remedy for recovery of loans,” it said. “Law makers must not have intended or imagined that money lenders or banks would obtain blank or post-dated cheques while sanctioning/disbursing loans as securities and would use them to make debtors/borrowers to repay loan under threat of prosecution and punishment under Section 138 of NI Act,” Justice Borkar held, dismissing the application.
    “It is doubtful if provisions of Section 138 attracted to a case in which a blank or post-dated cheque is obtained by a bank or money lender before or while sanctioning or disbursing loan amount as security for the loan,” the judge said.

    “In this case, the accused respondent issued the cheque in question as security for loan before loan amount was disbursed. So, cheque was not towards any existing debt or liability (which is a requirement under Section 138),” the high court observed, confirming the order of acquittal....

  9. #9
    Unregistered Guest

    Default Cheque

    One of my friend named Abhilash given me a sequrity cheque , but he alredy stopped that chequ with a reason cheque was lost,

  10. #10
    Unregistered Guest

    Default case against bank

    respected sir,,,,

    my que. is i have cheque issue one party. that party account opened in bank. But this account is a froud. and i have lost of financial.

    so, can i doing case against bank for that matter?

    Because of if, bank not create account on the froud basis, i ca't loss financial.

    suggest me

  11. #11
    sanjay .B Guest

    Post regarding blank cheque bounced for total amount by ing vysya bank ltd.

    Dear sir,

    loan taken from bank amount 24,96,174/- for 10 years (housing )ing vysya bank ltd

    after repaing from 4year 5 months the total amt paid is 18,50,000/-

    bank is charging high intrest of about 18 to 20 % on this doubti have repetedly asking them the current acc statment the bank is avoiding to disclose & threating me to pay full 25,00000/-according to them

    after sending them 2 no of notices through advcate with dd for statment of acc still same avoidince,
    & they have make a cheque bounce of total amt-24,5000/-( taking advantage of blank cheque 4 year before )threatning me that we will sell out your property.

    Is there any resque for common man.

  12. #12
    Unregistered Guest

    Default taking 15.5% from me for my mortgauge loan

    I took a 15Lakhs mortgage loan from INGVysya Bank they are charging 15.5% from me , I rescheduled my loan twice by paying part-payment of 10Lakhs while I have outstanding of 4.5Lakhs now they are charging around 15.5 as interest from me while they need to charge 13.5% from me.
    but they are charging 13.5 % as interest on my principle and 1.5% principle when I contacted branch they are telling me this is what we can do over all they are charging 15.5% on Mortgage Loan is this wise and correct to over charge from customer

    please tell me weather I can go to consumer court regarding this

    thanks
    pavan

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