Wrong credit of loan

[DR.MARIAPPAN GOVINDARAJAN]

The directors of one Nidhi company approached their bank for getting personal loan mortgaging their own properties. In the same company is also maintaining its account. The bank wrongly credited the entire loan amount in the accounts of the company and distributed the said amount to the directors. The said fact came to be known when the company accounts is audited by the auditor. How it could be rectified.

[KASTURI SETHI]

Dear Sir,

The company should repay the sum loaned with interest to the bank at the earliest and loan account should be closed first and thereafter, Directors should apply for loan afresh. This is the only remedy. It is a serious mistake on the part of the bank. Second defaulter is company. How the bank credited the entire loan amount in the accounts of the company without asking for a copy of resolution passed ?

[KASTURI SETHI]

Dear Sir,

In continuation of my reply, I further add that after repayment of loan amount with interest, the bank will close the loan account of the company in a routine manner.

[Ethirajan Parthasarathy]

Dear Mr.Govindarajan,

Little more facts of the case are needed.

Assuming :-

1) The bank has granted loan only in the name of the directors

2) The company has immediately transfer the money to the directors without delay.

The problem can be addressed as follows:-

Obtain a letter of confirmation from the bank that they have erroneously transferred the loan sanctioned in the personal capacity of the directors to the company's account with them.

In the company's book the amount received can be credited to "suspense" account & transfer a money to the directors should again be debited to "suspense" account. I feel even under Companies Act, the letter of confirmation from the bank about erroneous credit will come handy for any query about "loan" from directors reflected in the books of account of the company

AI Summary

Nidhi Company Directors Must Repay Miscredited Loan; Reapply for Personal Loans Post Bank Error Acknowledgment The directors of a Nidhi company sought personal loans using their properties as collateral. The bank mistakenly credited the loan amount to the company's account instead of the directors', and the funds were distributed to the directors. This error was discovered during an audit. To rectify this, the company should repay the loan with interest and close the loan account, after which the directors should reapply for the loan. Additionally, obtaining a confirmation letter from the bank acknowledging the error can help address any discrepancies in the company's financial records.