Settlement of education loan

Dear client,

First, about the case in Ahmedabad: generally, a bank files a case where the loan agreement allows jurisdiction or where the bank branch is located. However, since you studied, reside, and took the loan in Mumbai, you can challenge this by raising a jurisdiction objection before the court or tribunal. You (or your advocate) can request transfer of the case to Mumbai on the ground of convenience and cause of action.

Second, regarding threat of taking your mother’s property: this depends on whether she is a co-borrower or guarantor.

If your mother is a guarantor/co-applicant, then the bank can proceed against her legally.
If she is not a guarantor, her property generally cannot be touched for your loan.

Even if she is a guarantor, the bank cannot simply “take” property—they must follow legal process under laws like the SARFAESI Act, 2002, which applies only if:
The loan is secured (property mortgaged), and
Proper notices are served
For education loans, many are unsecured, so property seizure is often not directly possible unless collateral was given.

Third, regarding settlement demand (₹7 lakh on ₹8 lakh loan):
This is actually a negotiation situation. Since you had health issues and unemployment, you can:

Request restructuring or moratorium
Apply for one-time settlement (OTS) at a lower amount
Submit medical proof and financial hardship documents

Banks often reduce settlement if properly negotiated.

Also check if your loan falls under any government relief schemes like education loan restructuring or interest subsidy schemes (common in India through banks and schemes backed by the Reserve Bank of India guidelines).

An advocate on your behalf can talk to the financial lender and ask for settlement terms/ discussions.

Dear Client,

You should not panic, as the bank cannot directly seize your mother’s property without following due legal procedure under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and even then it applies only if she is a co-borrower/guarantor and the loan is secured; their demand of ₹7 lakh on an ₹8 lakh loan is not a genuine settlement, so you should formally request a One Time Settlement citing your medical condition and unemployment, and try negotiating for a much lower amount, while also responding in writing to protect your position; additionally, since the loan was taken and you reside in Mumbai, you can challenge the case filed in Ahmedabad for lack of territorial jurisdiction under the Code of Civil Procedure, 1908, and if the bank uses unfair pressure tactics, you may file a complaint with the Reserve Bank of India, but do not ignore notices and act promptly to avoid escalation.

Dear Client,

You can seek a one time settlement of the education loan, but the bank is not bound to accept a reduced amount and may insist on higher payment depending on its policy. You should send a written representation explaining your medical condition, unemployment, and financial hardship, and request a reasonable settlement or restructuring instead of agreeing orally.

Filing a case in Ahmedabad despite the loan being taken and you residing in Mumbai can be challenged on jurisdiction grounds. You should appear through an advocate and raise objection before the court. As regards your mother’s property, the bank can proceed only if she is a co borrower or guarantor and after following due legal process.

An advocate can assist in negotiation, filing reply, and protecting your and your mother’s interests. Please consult a local advocate for proper action.