Section 14 of The Rehabilitation Finance Administration Act, 1948
Notwithstanding any agreement to the contrary, the Administration may, by notice, require any borrower forthwith to repay in full with interest thereon any loan borrowed from it,—
- (a)if it appears to the Administration that false or misleading information in any material particular was given by the borrower for obtaining the loan or while furnishing any information under section 17; or
- (b)if the borrower has failed to comply with the terms of the contract with the Administration in the matter of the loan; or
- (c)if there is a reasonable apprehension that the borrower is unable to pay his debts or that insolvency proceedings or proceedings for liquidation may be commenced against him; or
- (d)if for any other reason it is necessary in the opinion of the Administration to protect the interests of the Administration.
Summary
- The Administration has the power to cancel a loan agreement and demand that the borrower pay back everything immediately, including interest.
- This can happen if the borrower lied or gave misleading information to get the loan.
- It can also happen if the borrower breaks the rules of their loan contract.
- If it looks like the borrower is going bankrupt or cannot pay their debts, the Administration can ask for the money back early.
- The Administration can also demand early repayment for any other reason if it is necessary to protect their own interests.
Practical examples
FAQ
1. Can the Administration force me to pay back my loan before the agreed time?
Yes. If you break the contract, lie on your application, or face bankruptcy, they can demand full payment right away.
2. What if I accidentally gave slightly wrong information, does it still count?
The rule says they can demand repayment if false or misleading information was given in any material particular, meaning important or significant details.
3. Do they need a specific reason to call the loan early?
They have listed specific reasons like fraud or bankruptcy, but the rule also allows them to do it for any other reason if they need to protect the Administration's interests.
Test yourself
Q1.Under Section 14 of The Rehabilitation Finance Administration Act, 1948, which of the following is a valid reason for the Administration to demand immediate repayment of a loan?
Q2.Under Section 14 of The Rehabilitation Finance Administration Act, 1948, what happens if there is a reasonable fear that the borrower is unable to pay their debts?
Q3.Under Section 14 of The Rehabilitation Finance Administration Act, 1948, how does the Administration enforce the early repayment?
Q4.Section 14 of The Rehabilitation Finance Administration Act, 1948, cross-references Section 17. How do these two sections interact?
Q5.Under Section 14 of The Rehabilitation Finance Administration Act, 1948, can the Administration demand early repayment if you have followed the contract perfectly and did not lie?