Dear Editor,
I’m sure that loans are granted to big business enterprises under well-researched terms and conditions that ensure, among various things, that the entity has the capacity to repay the loan.
If I take a loan from a bank to buy a car, I know that if I default in paying the interest and the principal in the stipulated time-frame, the car, which is hypothecated to the bank, shall be taken away. Is there any lacuna in the loan agreements between banks and business entities, that allows them to default in returning the interest and the principal amount loaned to them, in the given time-frame? If it is so, who is responsible for correcting such a lacuna? What are the penalties for not returning the loaned amount? I cannot understand why this problem has not been sorted out.
Ashok Chaturvedi
Via-e-mail
