Removing NPA account "LSS" even after 36 months of NPA date ?

[tech_ashes]

Hi all need your help and input with regards to this!

TLDR - NPA Shows up out of the blue on my credit report 8 years after loan disbursal and 38 months after NPA date.

BACKGROUND
My father had taken an MSME ( small and medium enterprise) loan from Central bank of India way back in 2015.
I had just graduated out of college (same month as loan applied and sanctioned) and i was added as a guarantor. The docs only mention my name and the name of my dad as co borrowers, it doesn't mention which loan am i a guarantor for, nor any other details.

Due to whatever circumstances, the Loan NPA'd in Nov-2019.
I had absolutely no information about this loan, since i had signed it way back in 2015 just on one document when i was very naive, and additionally the loan NEVER SHOWED UP on any of my credit information reports for years. I have a perfect payment record with zero missed payments, or even delays and I had been checking on my credit reports for years and reports and there was simply no mention of it. Suffice to say that this loan never was on my radar, as my father never mentioned it to me and the NPA status never reached me anyway, since i was working away from home.

Suddenly out of the blue after 38 months of the loan NPA date ( i have the date on email from the bank, more on this in a second) in Jan 2023, i see it popping up on my CIBIL report, and instantly killing it. my score dropped from 790 to 673 immediately. I complained to BO, and then CBI responded giving me a scanned copy of the guarantor docs tht i had signed, and also mentioning the date of NPA.

I had no idea where to proceed from there, and I didnt take any action at that time since i had no clue what to do.

It has been 11 months now and my cibil score gets hit with a "LSS" every month and my score is stuck at 673.
I dont understand,
1. Why did the bank not report it to my CIBIL in 2015
2. why did it not report to cibil in 2019
3. why in 2023 ( after 38 months)
4. how long will the LSS hits continue, because they dont seem to stop even 4 years down the NPA date. ?

I need your opinions and your advise here.
1. the first banking complaint to BO - got me the guarantor docs and nothing else.
2. i have complained to the Consumer Portal INGRAM - the result has been pending since 2 months.
3. meanwhile CIBIL continues to show a new LSS month on month, making me ineligible for any new credit cards, or credit limit enhancements loans whatever.

Thank you for making it this far! Appreciate any help that you can give!

 

[aayusharyan]

As far as I know, a typical NPA or Suit Filed stays for 7 years after initial report. But, you could theoretically argue why they did not report that loan from 2019 to 2023. Because even as guarantor, it should show up in your credit report. Which, even if you win that argument, they will just start fix that and I don't think that will be a good thing for the Credit Report and score.

Since, you did sign as a guarantor, I am not sure you can do anything about it, (unless you were under 18 that time of signing, which would have made you in eligible to do any lending contract). Then you might have a chance.

 

[tech_ashes]

True, but as per.limitations law if there is no acknowledgement of debt for 3 years then the bank loses its right to recover it.
Ideal the statute should have started from 2015 and the bank should not have been able.to.add it post 2018.
Even if they were to count the statute from 2019 NPA date, even then the bank shouldn't be able to put it on my Credit report based on the limitations law itself.
And I wasn't underage then.

Let's hope.more people from the forum can shed some more.light.
I definitely am not the only one facing such issues.

 

[aayusharyan]

If there is no acknowledgement of debt for 3 years then the bank loses its right to recover it.

This can be a very solid point, yes. I am also not sure about this. Let's wait for more experienced folks here to reply.
BTW, if you have any RBI Circular regarding this law, please share. I will read more and learn more about that.

 

[tech_ashes]

It's called the limitations act 1963.

 

[D₹V]

Hi all need your help and input with regards to this!

TLDR - NPA Shows up out of the blue on my credit report 8 years after loan disbursal and 38 months after NPA date.

BACKGROUND
My father had taken an MSME ( small and medium enterprise) loan from Central bank of India way back in 2015.
I had just graduated out of college (same month as loan applied and sanctioned) and i was added as a guarantor. The docs only mention my name and the name of my dad as co borrowers, it doesn't mention which loan am i a guarantor for, nor any other details.

Due to whatever circumstances, the Loan NPA'd in Nov-2019.
I had absolutely no information about this loan, since i had signed it way back in 2015 just on one document when i was very naive, and additionally the loan NEVER SHOWED UP on any of my credit information reports for years. I have a perfect payment record with zero missed payments, or even delays and I had been checking on my credit reports for years and reports and there was simply no mention of it. Suffice to say that this loan never was on my radar, as my father never mentioned it to me and the NPA status never reached me anyway, since i was working away from home.

Suddenly out of the blue after 38 months of the loan NPA date ( i have the date on email from the bank, more on this in a second) in Jan 2023, i see it popping up on my CIBIL report, and instantly killing it. my score dropped from 790 to 673 immediately. I complained to BO, and then CBI responded giving me a scanned copy of the guarantor docs tht i had signed, and also mentioning the date of NPA.

I had no idea where to proceed from there, and I didnt take any action at that time since i had no clue what to do.

It has been 11 months now and my cibil score gets hit with a "LSS" every month and my score is stuck at 673.
I dont understand,
1. Why did the bank not report it to my CIBIL in 2015
2. why did it not report to cibil in 2019
3. why in 2023 ( after 38 months)
4. how long will the LSS hits continue, because they dont seem to stop even 4 years down the NPA date. ?

I need your opinions and your advise here.
1. the first banking complaint to BO - got me the guarantor docs and nothing else.
2. i have complained to the Consumer Portal INGRAM - the result has been pending since 2 months.
3. meanwhile CIBIL continues to show a new LSS month on month, making me ineligible for any new credit cards, or credit limit enhancements loans whatever.

Thank you for making it this far! Appreciate any help that you can give!

Do you have PDF copies of CIBIL report before 2023 where NPA wasn't there?

If yes then you can fight legally since you'll have proof that there was no NPA before & they were unable to report it in 3 years.

You need evidence 🧾 now

 

[tech_ashes]

Yes i have PDF files of the CIBIL reports where they did not show NPA. The NPA showed up on 8th Jan 2023, and i even had pdf file of 2nd Jan 2023. I have kept pdf files of all CICs for years.

Where do i fight it legally? Which court exactly?

 

[aayusharyan]

Yes i have PDF files of the CIBIL reports where they did not show NPA. The NPA showed up on 8th Jan 2023, and i even had pdf file of 2nd Jan 2023. I have kept pdf files of all CICs for years.

Where do i fight it legally? Which court exactly?

When there is a discrepancy, I send an email to both, lender and Credit Bureau to fix it. Takes months, but they eventually do it... Not sure about NPA case though.
I have fought incorrect reporting of delayed payment, incorrect Credit Enquiries, basic stuff like that.

 

[Shubham Yadav]

Yes i have PDF files of the CIBIL reports where they did not show NPA. The NPA showed up on 8th Jan 2023, and i even had pdf file of 2nd Jan 2023. I have kept pdf files of all CICs for years.

Where do i fight it legally? Which court exactly?

What was your age while signing the loan document ?

 

[tech_ashes]

What was your age while signing the loan document ?

22. I was just out of college and i was supposed to join my next next month.

 

[D₹V]

Yes i have PDF files of the CIBIL reports where they did not show NPA. The NPA showed up on 8th Jan 2023, and i even had pdf file of 2nd Jan 2023. I have kept pdf files of all CICs for years.

Where do i fight it legally? Which court exactly?

Then do complaint in banking ombudsman again quoting that bill/regulation.

And seek compensation & removal of NPA too.

 

[aks98765]

True, but as per.limitations law if there is no acknowledgement of debt for 3 years then the bank loses its right to recover it.
Ideal the statute should have started from 2015 and the bank should not have been able.to.add it post 2018.
Even if they were to count the statute from 2019 NPA date, even then the bank shouldn't be able to put it on my Credit report based on the limitations law itself.
And I wasn't underage then.

Let's hope.more people from the forum can shed some more.light.
I definitely am not the only one facing such issues.

Law of limitation bars the remedy not right. The amount will still be overdue even if limitation is over. Is property involved in loan? Then limitation period will be 12 years(in case of property, right will also be lost). There are many interpretations of limitation period start date, however most common is “last undisputed transaction”. If your father signed aod or made any payments or acknowledged any demand/overdue notice and bank can prove he has sufficient communication with you within last 3/12 years, bank can sue you. Also you cannot sue the bank to correct their mistake. Account not being reported as NPA on your CIC report was mistake not that it is being reported now.

Contact a good lawyer if you want to pursue this legally, I’m not a lawyer so cannot suggest exact course of action. He may see some merit after studying your case and suggest a solution.

 

[Suspicious Activity]

Likely scenario - bank had not updated guarantor details/kyc in loan due to which cibil reporting was unsuccessful.

Someone from recovery team just realised that fact and updated your kyc in the loan account.

One document is more than sufficient for adding as loan guarantor.
You cannot claim innocence that you were only 22 as 18 is the cut off.


Solution-that npa will persist till the account is upgraded. And it will always show in your CIBIL. Impact will reduce after 7-8 years of it being written off.


Source-as a banker, i have done the same activity many times where we realised guarantor kyc was not updated and later updated in system post npa slippage.

 

[tech_ashes]

One document is more than sufficient for adding as loan guarantor.
You cannot claim innocence that you were only 22 as 18 is the cut off.

I know "now" that i was a guarantor. It simply never showed up on my CIBIL all these years. If it had , i simply wouldn't have let it go NPA and kept it updated. if it never showed up on my cibil, how was i to know, whether the loan sanctioned/failed/father removed me as a guarantor etc etc etc.

Solution-that npa will persist till the account is upgraded. And it will always show in your CIBIL. Impact will reduce after 7-8 years of it being written off.

this is where the issue is. The account should have been on my cibil in 2015. Or at the bare minimum on 2019. From what i see in the cibil reports it only considers last 36 months for score calculation. and in 2023 it would have completed its 36 months. hence even if they reported while it went NPA, it would have dropped off my CIBIL report as being older than 36 months. The issue is that it keeps adding an LSS month on month with no signs of stopping.

Source-as a banker, i have done the same activity many times where we realised guarantor kyc was not updated and later updated in system post npa slippage.

Did you ever have to do it post 3 years or in an NPA case?

 

[tech_ashes]

Is property involved in loan?

No property is involved. Completely unsecured load.

There are many interpretations of limitation period start date, however most common is “last undisputed transaction”. If your father signed aod or made any payments or acknowledged any demand/overdue notice and bank can prove he has sufficient communication with you within last 3/12 years, bank can sue you.

My father hasnt made any contact with the bank, since 2019. the account went NPA by itself, for unpaid dues. I have had no communication with the bank either.

Also you cannot sue the bank to correct their mistake. Account not being reported as NPA on your CIC report was mistake not that it is being reported now.

there are two thoughts here. I might be a little incoherent but bear with me.
1. bank should have reported to cibil in 2015 ( loan sanctioned). since they didn't they lose the right to recover from me from 2018
2. bank should have reported to cibil in 2019 ( loan npa). since they didn't they lose the right to recover from me from 2022

in either case, i should not be liable from 2022 ( worst case). I obviously cant sue the bank for correcting their mistake.
"but in correcting their mistake, with making another mistake and screwing up my cibil" that is where my issue is.
I would be absolutely fine with them making a correction in 2019 cibil data and then starting 36 months from there.

What i am not fine with is them putting an NPA of 2019, in 2023 and starting 3/7/12 years from here.

 

[aks98765]

One thing you need to understand is that even if limitation is over, bank did not lose "RIGHT" to recover its dues, only remedy is lost i.e. they cannot sue you in court of law or resort to other laws as RR, DRT etc. You are still liable to pay and will continue to do so till bank receives its due and issues a no-dues certificate. Bank is well within its rights to keep reporting the account as NPA/LOSS to CIC till then. The 3 years for cibil calculation will start from the date account is closed either by payment/settlement/writeoff. And it will show as that for your whole life. Only it will be stopped to be considered for credit score calculation after some years (different for different CICs and category of loans, some CICs will drop off the account entirely but CIBIL shows all the account since inception) and different banks as per their risk management policy while deciding on your proposal.

For correction of start date of overdue, give a complaint in writing to the bank and they will update it since 2015 (which will most likely dip your score further due to more no. of defaults).

 

[Suspicious Activity]

I know "now" that i was a guarantor. It simply never showed up on my CIBIL all these years. If it had , i simply wouldn't have let it go NPA and kept it updated. if it never showed up on my cibil, how was i to know, whether the loan sanctioned/failed/father removed me as a guarantor etc etc etc.

this is where the issue is. The account should have been on my cibil in 2015. Or at the bare minimum on 2019. From what i see in the cibil reports it only considers last 36 months for score calculation. and in 2023 it would have completed its 36 months. hence even if they reported while it went NPA, it would have dropped off my CIBIL report as being older than 36 months. The issue is that it keeps adding an LSS month on month with no signs of stopping.

Did you ever have to do it post 3 years or in an NPA case?

It doesn't consider the last 36 months for score calculation. It only SHOWS the last 36 months. If an account is in NPA, it won't drop off from your report after 36 months. It will continue showing loss and eventually, if and when the bank writes it off, the status will be updated as Written off. Once that happens, it will take around 6-7 years for its impact to reduce.

Please note, 6-7 years from the DATE your account has been classified as written off. not from the date of reporting to CIBIL.

As for your argument that you knew 'now' that you were a guarantor, banks will argue that you signed with full knowledge of being a guarantor. Sorry, but in recent judgements, courts and ombudsmen have rarely sided with aggrieved parties who claimed they were not aware of the implications of being a guarantor. Sorry, but that's how it is.

As for me doing it , yes we have done it even 6-7 years post account slipping into npa. What happens is, people get transferred, new people come in who open the files and realise guarantor updation is missing. So they do it and it starts showing up. Normally happens when an account is in NPA and no recovery is happening.

In your case, is your father willing/able to close the loan?

 

[tech_ashes]

The outstanding is a large-ish amount and even on repaying the principal it's likely going to show as "settled" that makes no sense.

What is the difference between write off and lss?

 

[aayusharyan]

The outstanding is a large-ish amount and even on repaying the principal it's likely going to show as "settled" that makes no sense.

What is the difference between write off and lss?

LSS basically means there were negotiations between the bank and the borrower and the Loan was Settled. Therefore Lender Settled Status.
Write off means that bank has written off the loan into NPA and they don't even expect to get paid anything back on that loan.