The rise in defaults and recovery woes of loans has shied away banks from the unsecured lending market. Due to this the rate of growth in the personal loan portfolio of banks has come down to 13.2 per cent to Rs 58,669 crore as on February 15, 2008 as compared with 30.6 per cent in the same period last year,
Banks are shying away from the unsecured lending market, thanks to the rising instances of defaults and recovery woes. The Reserve Bank of India in its 2007-08 report on Macroeconomic and Monetary Developments said the growth rate of the personal loan portfolio of banks has dipped to 13.2 per cent to Rs 58,669 crore as on February 15, 2008, as compared with 30.6 per cent in the same period last year.
Major players such as ICICI Bank, Citifinancial and GE Money have stopped from mounting their uncollaterized lending portfolio because of deteriorating risk return ratio. Judicial intervention and regulatory raps following recent instances of crossing limits by recovery agents, private and foreign banks and non-banking finance companies the banks have exited the small ticket size personal loan segments (STPL).
ICICI Bank, the country's second-largest bank, has stopped lending to borrowers from the sub-prime segment, while the biggest player in small loans, Citigroup, has made its processes more stringent. "We have tightened our credit screening in the unsecured loan segment based on the performance of the portfolio. Given the environment in the collection and risk reward ratio, we have decided to go slow," said Chanda Kochhar, joint managing director, ICICI Bank. In spite of the slowdown in the personal loan growth, there has been rise in credit cards outstanding which has grown by 62.42 per cent to Rs 6,502 crore as on February 15, 2008, as against Rs 4,003 crore on February 16, 2007. Banks are now convincing consumers to buy products through a credit card as it is more cost-effective and a quicker means of payment.
ICICI Bank, has done changes in payment mode of its consumer goods financing, it has moved from the post-dated cheque system to the credit card payment mode. This has increased the ticket size spending on credit cards. "Overall, consumers are seeing credit cards as a convenient mode of payment. The spending on cards will continue to see an increase," said the credit card head of a private sector bank.
Even there has been slowdown in the growth in home loan portfolio of banks. The portfolio grew at 12 per cent to Rs 26,930 crore as on February 15, 2008, as compared with 25.8 per cent growth (Rs 46,019 crore) in the same period last year. "Rising interest rates have also affected the loan growth in the banking system. The home loan business has also taken a hit on account of the high property prices," said a senior banker.
If we see the real estate sector also has shown down fall to 26.7 per cent in the credit growth as on February 15, 2008, as compared to a growth of 79 per cent in the same period last year. However banks have clearly rebalanced their loan portfolio, which is apparent from the rise in credit disbursements to the corporate sector. Disaggregated sect oral data up to February 15, 2008, showed that about 45 per cent of the incremental non-food credit year-on-year was absorbed by the industry compared with 36 per cent in the corresponding period of the previous year.
The expansion of incremental non-food credit to industry during this period was guided by infrastructure (power, port and telecommunication), textile, food processing, iron and steel, engineering, chemicals, vehicles, construction and petroleum industries. The infrastructure sector alone amounted to around 33 per cent of the incremental credit to the industry in comparison to21 per cent in the corresponding period of the previous year. The agricultural sector occupied around 9 per cent of the incremental non-food bank credit expansion as compared with 12 per cent in the corresponding period of the previous year.
Wednesday, April 30, 2008
Monday, April 28, 2008
Banking Ombudsman can help you figure out the problem
Now days taking loans is considered as a normal process. Working professionals, particularly the youth earning good packages, easily get fascinated by the aggressive campaigns of various banks and end up investing in to multiple credit cards and or obtaining personal loans.
But there is a need for customer awareness and education regarding the norms of the banking system and even the agents need to be trained for handling debt recovery.
There had been an incidence where a manager of a nationalized bank was attracted by an offer of a foreign bank for free issue of credit card for a year, with added features like accident insurance cover, etc. He got a credit card in December 2004 and used it up to November 2005. He paid his bills regularly and during the first week of December 2005, before expiry of the one-year term, he wrote to the issuing bank saying he was no more interested in the card.
As a security measure he cut the card into four pieces and requested for deletion of his membership from the bank’s card family. He also put a request with the bank to block the card to avoid misuse.
He did not get any acknowledgement from the bank. After following all the rules in January 2006, he received a bill containing an entry of Rs 600 towards carried over bill penalty and late fee and another entry of Rs 2,000 towards card renewal charges. In reply he wrote to the bank saying he had paid all bills and owed them nothing. Again, the bank did not send any acknowledgement in regard to his application.
In March, he again received another bill. The same story followed - he wrote to the bank, but there was no response.
After six months, when the bill amounted to around Rs 6,000, the customer tried contacting the bank through other means. Contacting through the helpline seemed nearly impossible, but he did manage to get through to the credit card department of the bank and narrated his story to an official. He was assured that the matter would be looked into.
The assurance given by the bank did not turn up fruitful, after 3-4 months, a recovery agent from the bank called at his residence and informed his wife that the card holder owed Rs 9,000 and the amount had to be paid immediately. Even the bank agents started calling up, which were often abusive. They refused to accept that he owed the bank nothing.
By October 2007, the bill amount had increased to around Rs 17,000. Finally, he decided to write to the nodal officer of the foreign bank, apprising him of the details and the harassment meted out to him. He marked a copy of the letter to the chief general manager, Reserve Bank of India and the Banking Ombudsman.
This time, the bank acted quickly and sent him, for the first time, a detailed letter. The letter had all the details of the charges standing against him. It was stated that in October 2005, Rs 600 was spent by the cardholder using the card, but the amount was paid one
But there is a need for customer awareness and education regarding the norms of the banking system and even the agents need to be trained for handling debt recovery.
There had been an incidence where a manager of a nationalized bank was attracted by an offer of a foreign bank for free issue of credit card for a year, with added features like accident insurance cover, etc. He got a credit card in December 2004 and used it up to November 2005. He paid his bills regularly and during the first week of December 2005, before expiry of the one-year term, he wrote to the issuing bank saying he was no more interested in the card.
As a security measure he cut the card into four pieces and requested for deletion of his membership from the bank’s card family. He also put a request with the bank to block the card to avoid misuse.
He did not get any acknowledgement from the bank. After following all the rules in January 2006, he received a bill containing an entry of Rs 600 towards carried over bill penalty and late fee and another entry of Rs 2,000 towards card renewal charges. In reply he wrote to the bank saying he had paid all bills and owed them nothing. Again, the bank did not send any acknowledgement in regard to his application.
In March, he again received another bill. The same story followed - he wrote to the bank, but there was no response.
After six months, when the bill amounted to around Rs 6,000, the customer tried contacting the bank through other means. Contacting through the helpline seemed nearly impossible, but he did manage to get through to the credit card department of the bank and narrated his story to an official. He was assured that the matter would be looked into.
The assurance given by the bank did not turn up fruitful, after 3-4 months, a recovery agent from the bank called at his residence and informed his wife that the card holder owed Rs 9,000 and the amount had to be paid immediately. Even the bank agents started calling up, which were often abusive. They refused to accept that he owed the bank nothing.
By October 2007, the bill amount had increased to around Rs 17,000. Finally, he decided to write to the nodal officer of the foreign bank, apprising him of the details and the harassment meted out to him. He marked a copy of the letter to the chief general manager, Reserve Bank of India and the Banking Ombudsman.
This time, the bank acted quickly and sent him, for the first time, a detailed letter. The letter had all the details of the charges standing against him. It was stated that in October 2005, Rs 600 was spent by the cardholder using the card, but the amount was paid one
Tuesday, April 22, 2008
Shop for home loan rates before signing
With the booming up of MNCs and a major change in the salary packages, has completely changed the economic structure of the society. The young salaried employees are looking for options to invest their money and real estate has perceived lucrative and prudent to them. The high salaried youngsters either have built or purchased their homes by taking home loan.
Now days it is no longer difficult to get a HFC or home loan from bank. The most important issue is how to choose the home loan amount?
The amount of loan depends upon borrower’s finances, other commitments and more importantly his peace of mind. A huge loan amount will result in greater outflow in the form of EMI from the borrower’s pocket.
With the rising competition in the home loan segment banks are offering a number of innovative products to attract customers. Many private banks like ICICI bank, HDFC bank, Standard Chartered, Axis bank, IDBI bank, etc. and public sector banks like State Bank of India, Bank of Baroda, Bank of Rajasthan, etc. are offering a number of customized products to suite the requirements of varied customers.
Apart from floating rate home loan and fixed rate home loan which are being offered by all the banks, a number of products which are combination of the two and coupled with numerous types of repayment facilities are also being offered by the banks.
For instance ICICI bank is offering a home loan product which is the combination of floating rate and fixed rate home loan. In this, the borrower can opt for a portion of the total loan that he wants to borrow under floating and fixed rate scheme.
Then there is a short term bridging loan offered by HDFC for those who have plans to move into bigger, better and more convenient house, but you do not want to sell the existing house before buying the bigger one. This change creates a variance in the cash flow. For such buyers HDFC has created this loan. Short term bridging loans are easy to manage and repayable in either lump-sum payment of principal or installments.
Likewise there are more options available for different categories of borrowers. You can choose from them according to your requirement.
Interest rate on home loans
A home loan rate is linked to an internally computed reference rate such as prime lending rate (PLR) or mortgage reference rate (MRR). There is a difference of 2% between the reference rate and the effective rate. Whenever this reference rate increases, it pushes up the home loan rates as well.
Consider a loan amount of Rs forty lakh at a rate of 11 percent interest over tenure of 15 years. The EMI amount comes to Rs forty five thousand five hundred. If the loan amount were less, say Rs twenty five lakhs, for the same interest rate and tenure, the EMI will work out to be lesser. It means greater the home loan amount, greater will be the EMI outflow and tighter will be the borrower’s finances.
Then there is floating rate and fixed rate to choose from. Normally, the interest rate on fixed rate home loan is one percentage point higher than that on the floating rate loan. In the fixed rate you are insulated from the risk of rise in the interest rates in future. However, the fixed rate home loan debars you from taking the advantage of any fall in the interest rate.
On the other hand, as far as a floating rate loan is concerned, the manner of its determination is very non-transparent.
The bank will declare a benchmark rate. This home loan rate will be typically charged at a discount (lesser than the benchmark rate) or, in the case of some banks, at a premium (higher than the benchmark rate).
There is no single answer to the question whether one should go for a fixed or floating rate. The answer changes from time to time.
If you want information about the existing home loan rates being offered by different banks then check with rupeetimes.com. On this site you will get the complete information on interest rates as well as how to calculate EMI.
Therefore, the most important thing is before you sign on the dotted line with your home loan provider, just shop around to see you have got the best rates.
Now days it is no longer difficult to get a HFC or home loan from bank. The most important issue is how to choose the home loan amount?
The amount of loan depends upon borrower’s finances, other commitments and more importantly his peace of mind. A huge loan amount will result in greater outflow in the form of EMI from the borrower’s pocket.
With the rising competition in the home loan segment banks are offering a number of innovative products to attract customers. Many private banks like ICICI bank, HDFC bank, Standard Chartered, Axis bank, IDBI bank, etc. and public sector banks like State Bank of India, Bank of Baroda, Bank of Rajasthan, etc. are offering a number of customized products to suite the requirements of varied customers.
Apart from floating rate home loan and fixed rate home loan which are being offered by all the banks, a number of products which are combination of the two and coupled with numerous types of repayment facilities are also being offered by the banks.
For instance ICICI bank is offering a home loan product which is the combination of floating rate and fixed rate home loan. In this, the borrower can opt for a portion of the total loan that he wants to borrow under floating and fixed rate scheme.
Then there is a short term bridging loan offered by HDFC for those who have plans to move into bigger, better and more convenient house, but you do not want to sell the existing house before buying the bigger one. This change creates a variance in the cash flow. For such buyers HDFC has created this loan. Short term bridging loans are easy to manage and repayable in either lump-sum payment of principal or installments.
Likewise there are more options available for different categories of borrowers. You can choose from them according to your requirement.
Interest rate on home loans
A home loan rate is linked to an internally computed reference rate such as prime lending rate (PLR) or mortgage reference rate (MRR). There is a difference of 2% between the reference rate and the effective rate. Whenever this reference rate increases, it pushes up the home loan rates as well.
Consider a loan amount of Rs forty lakh at a rate of 11 percent interest over tenure of 15 years. The EMI amount comes to Rs forty five thousand five hundred. If the loan amount were less, say Rs twenty five lakhs, for the same interest rate and tenure, the EMI will work out to be lesser. It means greater the home loan amount, greater will be the EMI outflow and tighter will be the borrower’s finances.
Then there is floating rate and fixed rate to choose from. Normally, the interest rate on fixed rate home loan is one percentage point higher than that on the floating rate loan. In the fixed rate you are insulated from the risk of rise in the interest rates in future. However, the fixed rate home loan debars you from taking the advantage of any fall in the interest rate.
On the other hand, as far as a floating rate loan is concerned, the manner of its determination is very non-transparent.
The bank will declare a benchmark rate. This home loan rate will be typically charged at a discount (lesser than the benchmark rate) or, in the case of some banks, at a premium (higher than the benchmark rate).
There is no single answer to the question whether one should go for a fixed or floating rate. The answer changes from time to time.
If you want information about the existing home loan rates being offered by different banks then check with rupeetimes.com. On this site you will get the complete information on interest rates as well as how to calculate EMI.
Therefore, the most important thing is before you sign on the dotted line with your home loan provider, just shop around to see you have got the best rates.
Saturday, April 19, 2008
UBI launches reverse mortgage scheme and introduced deposit scheme
On Friday in a news conference deputy general manager K M Purushothaman of Union Bank of India announced reverse mortgage scheme for senior citizens. Speaking in news conference he said that the facility has been introduced in view of the Finance Minister’s offer in the union budget presented in February.
Under this scheme those aged above 60 and having land and house of their own can will be benefited. As per the scheme, the bank will provide the senior citizen a fixed amount for his/her day-to-day expenses, health care and other expenses on a monthly basis. The time period of the loan will be a maximum of up to 15 years.
The specialty of the scheme is that there will not be any repayment. The principal amount and interest will be estimated in advance and the same would be realized by selling the property when the loan period expires or after the death of the senior citizen and his/her spouse. In this scheme there will be the facility for the borrower to sell the property before the expiry of the loan period and settle the loan. A fixed interest of 10 percent will be charged. The lowest limit of the loan amount will be Rs 1 lakh and the higher will be Rs 50,00,000.
The bank has introduced a deposit scheme. In this new scheme launched on April 10, the interest rate will be 9% on the deposit for 400 days. Senior citizens will get another half percent additional interest. Purushothaman remarked that other banks were giving only 8.25 percent to 8.50 percent on deposit for one year.
Interest rate on commercial and housing loans will be available according to time slab i.e. 9.25 percent for 5 years, 9.5 percent for 10 years and 9.75 percent for 15 years. Loan for a period of over 15 years will be charged at 10 percent. He said loans availed of at a higher rate from the new generation private banks can be transferred to the Union Bank of India.
Under this scheme those aged above 60 and having land and house of their own can will be benefited. As per the scheme, the bank will provide the senior citizen a fixed amount for his/her day-to-day expenses, health care and other expenses on a monthly basis. The time period of the loan will be a maximum of up to 15 years.
The specialty of the scheme is that there will not be any repayment. The principal amount and interest will be estimated in advance and the same would be realized by selling the property when the loan period expires or after the death of the senior citizen and his/her spouse. In this scheme there will be the facility for the borrower to sell the property before the expiry of the loan period and settle the loan. A fixed interest of 10 percent will be charged. The lowest limit of the loan amount will be Rs 1 lakh and the higher will be Rs 50,00,000.
The bank has introduced a deposit scheme. In this new scheme launched on April 10, the interest rate will be 9% on the deposit for 400 days. Senior citizens will get another half percent additional interest. Purushothaman remarked that other banks were giving only 8.25 percent to 8.50 percent on deposit for one year.
Interest rate on commercial and housing loans will be available according to time slab i.e. 9.25 percent for 5 years, 9.5 percent for 10 years and 9.75 percent for 15 years. Loan for a period of over 15 years will be charged at 10 percent. He said loans availed of at a higher rate from the new generation private banks can be transferred to the Union Bank of India.
Wednesday, April 16, 2008
Corporation bank launches “Corp Shelter’ loan scheme for Senior Citizens
In Mangalore on Tuesday M Narendra, Chief General Manager (CGM) of the Corporation bank launched ‘Corp Shelter,’ a reverse mortgage loan scheme for senior citizens. Mohan Rao, general manager of the bank was also present at the launch of the scheme.
After the launch of the scheme he said that senior citizens who have completed 60 years can take a loan from Rs 1 lac to Rs 50 lac through this reverse mortgage scheme. Even the married couples can take loan as joint borrowers for financial assistance, provided one spouse has completed 60 years and other 55 years, he informed.
He added the borrower should be the owner of residential property (house or flat) located in India, with clear title indicating the prospective borrowers’ ownership of the property, which should also be their permanent residence. In view of the public concerns and as a goodwill gesture, the bank has waived the pre-payment penalty.
After the launch of the scheme he said that senior citizens who have completed 60 years can take a loan from Rs 1 lac to Rs 50 lac through this reverse mortgage scheme. Even the married couples can take loan as joint borrowers for financial assistance, provided one spouse has completed 60 years and other 55 years, he informed.
He added the borrower should be the owner of residential property (house or flat) located in India, with clear title indicating the prospective borrowers’ ownership of the property, which should also be their permanent residence. In view of the public concerns and as a goodwill gesture, the bank has waived the pre-payment penalty.
Saturday, April 5, 2008
Banks to provide fresh data on farm loan exposure
Commercial banks and co-operative lending agencies have been asked by the finance ministry to provide the data on farm loans to help the finance ministry in finalizing the basics of the farm loan waiver scheme. The banks and co-operative lending agencies have been forced to operate at the grassroots level since the ministry wants fresh, structured data on their farm loan exposure.
Banks have now been told to remove all the extra data which they had included in the beginning while submitting farm loan exposure data for the first time in early March. For instance, now they have been advised to present only the installments overdue as on December 31, 2007, and which remained unpaid till February 29, 2008.
Almost all banks in their previous reports had presented the total NPA figures, which are, in most cases, higher than the overdue amounts. In real meaning, if a loan is to be repaid fully by September 2008 and two installments are as on December 31, 2007, then the loan becomes an NPA, but banks probably be compensated for the two unpaid installments only, not the entire NPA amount.
Apart from this when a loan becomes NPA; banks do not add interest on this. But while presenting the data on farm loan exposure, most banks had calculated the interest on the NPA amount. This time the ministry has asked banks to exclude the interest (which is not applied to the books) from their calculations while giving the farm loan exposure data.
It has also asked for a separate data on banks’ exposure to plantation and horticulture. Exposure to plantation and horticulture is different from normal crop loan in the sense that these are taken for a 3-5-year period. Short-term crop loans are typically taken for less than a year. Banks have been asked to mention the written-off accounts separately to date. All written-off accounts are likely to be included in the loan-waiver package.
While the new ministry guidelines have made the waiver scheme a bit more clearly to everybody concerned, banks are pushing their branches as they need to get the details from them in the farm belt once again. Agricultural co-operative banks are finding the difficulty as they are unable to collect the data in a short notice with the absence of computerization.
“Collecting the data once again is difficult for even bigger banks. We are left with no option, but to compromise with the authenticity of the data,” said a senior public sector bank executive in Mumbai.
Banks have now been told to remove all the extra data which they had included in the beginning while submitting farm loan exposure data for the first time in early March. For instance, now they have been advised to present only the installments overdue as on December 31, 2007, and which remained unpaid till February 29, 2008.
Almost all banks in their previous reports had presented the total NPA figures, which are, in most cases, higher than the overdue amounts. In real meaning, if a loan is to be repaid fully by September 2008 and two installments are as on December 31, 2007, then the loan becomes an NPA, but banks probably be compensated for the two unpaid installments only, not the entire NPA amount.
Apart from this when a loan becomes NPA; banks do not add interest on this. But while presenting the data on farm loan exposure, most banks had calculated the interest on the NPA amount. This time the ministry has asked banks to exclude the interest (which is not applied to the books) from their calculations while giving the farm loan exposure data.
It has also asked for a separate data on banks’ exposure to plantation and horticulture. Exposure to plantation and horticulture is different from normal crop loan in the sense that these are taken for a 3-5-year period. Short-term crop loans are typically taken for less than a year. Banks have been asked to mention the written-off accounts separately to date. All written-off accounts are likely to be included in the loan-waiver package.
While the new ministry guidelines have made the waiver scheme a bit more clearly to everybody concerned, banks are pushing their branches as they need to get the details from them in the farm belt once again. Agricultural co-operative banks are finding the difficulty as they are unable to collect the data in a short notice with the absence of computerization.
“Collecting the data once again is difficult for even bigger banks. We are left with no option, but to compromise with the authenticity of the data,” said a senior public sector bank executive in Mumbai.
Tuesday, April 1, 2008
No escape for the guarantor after signing loan agreement
Before signing the guarantor papers for any of your friend’s loan read all the clauses and the fine prints carefully and be sure that your friend will be doing the repayment of loan up to the last penny he owes the bank.
Recently the Supreme Court in its judgment had made it clear that if you revoke the guarantee before the loan amount is disbursed; there would be no escape for you from paying up the defaulted amount.
This judgment given by a bench comprising Justices Tarun Chatterjee and H S Bedi is going to hit guarantors hard as it virtually lays down the principle "once a guarantor, you stay a guarantor till the recovery of the loan amount" much to the joy of financial institutions.
In its judgment the apex court have asked a guarantor, Sita Ram Gupta, to pay up the amount decreed against the persons who had taken the loan in 1980 from Punjab National Bank. It supported a Delhi high court verdict asking Gupta to pay up the decreed amount of Rs 42,874, including interest at the rate of 19.5% per annum.
Though Gupta, through his counsel, clarified that the guarantee issued by him to PNB was with drawn by his letter dated July 31, 1980, and argued that since his guarantee stood cancelled, he was not liable to pay the loan for which he had initially agreed to stand guarantee.
He said under Section 130 of the Indian Contract Act clearly provided for revocation of guarantee by prior notice to the creditor and argued that he had revoked the guarantee long before the loan was given.
But Gupta had forgot to read the fine print in the guarantee agreement signed by him with the bank, which read: "The guarantor hereby guarantees... to pay the bank on demand all principal, interest, costs, charges and expenses due and which may at any time become due to the bank from the borrower down to the date of payment."
The agreement also stated: "the guarantors hereby declare that this guarantee shall be a continuing guarantee and shall not be considered as cancelled or in any way affected...."
As per these two clauses in the guarantee agreement, which is virtually present in every loan agreement, the bench said, "This was an agreement entered into by Gupta with the bank, which is binding on them.
"Having entered into the agreement in the manner indicated above, it was not open to Gupta to turn around and say that in view of Section 130 of the Contract Act, since the guarantee was revoked before the loan was advanced to the persons, he was not liable to pay the decretal amount as a guarantor to the bank as his guarantee had already stood revoked."
The bench added, "It was not open to Gupta to revoke the guarantee as he had agreed to treat the guarantee as a continuing one and was bound by the terms and conditions of the said guarantee."
Recently the Supreme Court in its judgment had made it clear that if you revoke the guarantee before the loan amount is disbursed; there would be no escape for you from paying up the defaulted amount.
This judgment given by a bench comprising Justices Tarun Chatterjee and H S Bedi is going to hit guarantors hard as it virtually lays down the principle "once a guarantor, you stay a guarantor till the recovery of the loan amount" much to the joy of financial institutions.
In its judgment the apex court have asked a guarantor, Sita Ram Gupta, to pay up the amount decreed against the persons who had taken the loan in 1980 from Punjab National Bank. It supported a Delhi high court verdict asking Gupta to pay up the decreed amount of Rs 42,874, including interest at the rate of 19.5% per annum.
Though Gupta, through his counsel, clarified that the guarantee issued by him to PNB was with drawn by his letter dated July 31, 1980, and argued that since his guarantee stood cancelled, he was not liable to pay the loan for which he had initially agreed to stand guarantee.
He said under Section 130 of the Indian Contract Act clearly provided for revocation of guarantee by prior notice to the creditor and argued that he had revoked the guarantee long before the loan was given.
But Gupta had forgot to read the fine print in the guarantee agreement signed by him with the bank, which read: "The guarantor hereby guarantees... to pay the bank on demand all principal, interest, costs, charges and expenses due and which may at any time become due to the bank from the borrower down to the date of payment."
The agreement also stated: "the guarantors hereby declare that this guarantee shall be a continuing guarantee and shall not be considered as cancelled or in any way affected...."
As per these two clauses in the guarantee agreement, which is virtually present in every loan agreement, the bench said, "This was an agreement entered into by Gupta with the bank, which is binding on them.
"Having entered into the agreement in the manner indicated above, it was not open to Gupta to turn around and say that in view of Section 130 of the Contract Act, since the guarantee was revoked before the loan was advanced to the persons, he was not liable to pay the decretal amount as a guarantor to the bank as his guarantee had already stood revoked."
The bench added, "It was not open to Gupta to revoke the guarantee as he had agreed to treat the guarantee as a continuing one and was bound by the terms and conditions of the said guarantee."
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