Legality and Prudence in Financial Institutions

Author: Nandini Bala, Law student (BBA.LLB )

Published On: 2023-07-19

Taking loans for the purpose of personal and financial needs is the need of the hour for every individual . Circumstantially situations can be unjustifiable in taking loans which put the loan takers in dire strait's. The evidence of farmers sacrificing their lives for loan repayment is spiking at alarming levels in our country every now and then. Sometimes climate changes, uneven rainfall distribution pattern has roiled the crop projection picture which keeps their calculations out of gear.But the legal consequences tend to remain stagnant and still even after he sacrifices his life for the mishaps for non repayment. It is necessary to understand that necessities in life will not conceal the consequences of thereafter.This article is based on the experience that I encountered with my legal internship at a financial institution. I witnessed situations where people were in dire straits when they took out loans and I felt so sentimental when I saw events where they were heart broken when they couldn’t repay the loan.

We know that Loan is to “lend a thing to another”. This can be either gratuitous or a reward, either in the form of “money “kind “or an “advance which carries interest” containing any condition of repayment with interest.