I got educational loan on 2008 from one of a Bank in India. So far I am paying only interest money not principal money for it, but it’s also not regularly, I left some intermediate gap on it.

Last three months I am consecutively paid 2000rs (Indian Money) per month, while 2000 is sum of both interest and principal amount. Last month I have checked my bank account credit statement.

The bank didn’t put any interest amount on my loan account, they reduced the amount of my loan from the principal money not interest money.

I asked the manager about the problem, he said ‘your loan has considered as bad debts, and if you settle the amount to the bank in single payment we will give some discount’.

So I need to understand about these two things,

  1. Now that my loan is considered as bad debts; should I pay the remaining loan money or not.
  2. Can I bargain with the bank and pay only some part of amount.

Looking for a favorable solution.


You should definitely pay the remaining loan amount as quickly as possible. A loan in bad debts means that Bank has written it off books as its a education loan and there is no collateral. The defaults do get report to CIBIL [Credit Information Bureau India] and as such you will have difficulties getting credit card / new loans in future.

Talk to the Bank Manager and ask can you regularize the loan? There are multiple options you would need to talk and find out;
1. You can negotiate and arrive at a number. Typically more than the principal outstanding and less than interest and penalties charged.
2. You can request to re-do the monthly payments with new duration, this will give you more time.
3. May one time large payment and subsequent amount in monthly payments.

At the end its Bank's discretion whether to accept your terms or not.

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