LOAN TO SALARY EARNERS
1) The borrower should produce along with loan application Salay Certificate, an undertaking to deduct amount from monthly salary of the borrowers and to remit the same to the Bank from pay drawing officer, both shall be signed by the drawing officer.
2) The borrower should authorize the drawing officer to deduct a certain amount from his salary and to remit the same to credit his loan amount with the Bank. Undertaking by the drawing office should be in duplicate, one should be sent to drawing officer for confimation after the loan is sanctioned.
3) In the salary certificate, if the total deduction including the deduction of the Bank exceeds 50% of the gross salary, such borrower should be sanctioned such loan
4) Documents : The following documents shall be obtained while disbursing such loans, from the borrower. i) Demand Promissory Note ii) Agreement of Salary Deduction Loan iii) Salary certificate signed by the drawing Officer iv) Undertaking from drawing Officer in duplicate v) Any other documents prescribed by the Bank from time to time.
5) In case of default in payment of monthly deduction amount by the drawing officer, a notice shall be served to the drawing officer, the borrower and the guarantor. A notice under Sec 34(2) of the Karnataka Co-operative Societies Act 1959 should be served to the pay drawing officer. In addition to a legal proceedings shall be initiated against the borrower and the guarantor.