Limitation Act – Important Aspects :

One of the important laws relating to banking is the Law of Limitation; this law prompts the lending banker to remain vigilant in taking legal course of action against the defaulting borrower

A banker may take legal action by filing a suit, preferring an appeal or applying for recovery only when the documents are within the period of limitation. This period of limitation is the period prescribed under the Limitation Act, 1963 within which any suit, appeal or application can be made.

Therefore, banks should be careful to ensure that all legal loan documents held are valid and not time barred. In other words, it is the responsibility of lenders to ensure that all loan documents are properly executed and they are all within the required limitation period as per the provisions of the Limitation Act. This is one of the crucial aspect in credit management of banks.