Balance & Security Confirmation Letter by Borrower Format

A balance and security confirmation letter by a borrower (addressed to the lender) amounts to a valid "acknowledgement of debt" under section 18 of the Limitation Act, 1963 for initiating a legal action against the borrower viz. insolvency proceedings.

Hence, the banks ask their customers (especially business customers who have taken loans) to produce balance and security confirmation letters duly signed and stamped, if needed, as an acknowledgement of the loan taken and hypothecation given.

Here are samples of such balance and security confirmation letters that can be given by the borrowers to the bankers. Please modify the format as deemed suitable.

TEMPLATE #1

To

The Manager

(Name of the Bank)

________ Branch

Reg: Term loan/ Cash credit/ Overdraft account of (Name of the Borrower) bearing no. ________.

Sir/Madam,

I/We hereby confirm that the correctness of the balance of Rs. ______ (Rupees _____________ only) owing from me/us as a borrower/ guarantor in respect of the above-mentioned account inclusive of interest at the rate of ____ per cent per annum with monthly/ quarterly/ half-yearly rest as on (Date). I acknowledge my/our liability for the same.

As security, _______ Bank is having hypothecation/ pledge of my/our stocks/goods/machinery/________ vide agreement dated _______ and/or registered mortgage/ equitable mortgage created on ______ of my/our properties.

Yours faithfully,

    (Signature)

(Name of the Borrower/ Guarantor)

Dated ______

TEMPLATE #2

To

The Manager

(Name of the Bank)

________ Branch

Reg: Term loan/ Cash credit/ Overdraft account of (Name of the Borrower) bearing no. ________

Sir/Madam,

I/We hereby confirm that the correctness of the amount of Rs. ______ (Rupees _____________ only) owing from me/us as borrower(s)/guarantor(s) on the basis of the documents in respect of the account mentioned above inclusive of interest at the rate of ____ per cent per annum till __________ (half-yearly) and thereafter at the rate of ____ per cent per annum with monthly/ quarterly/ half-yearly rests as on _________ though not charged in the account besides further interest due from me/us at the rate of _______ per cent per annum on the said amount with monthly/quarterly/half-yearly rest. I acknowledge my/our liability for the same.

As security, _______ Bank is having hypothecation/ pledge of my/our stocks/goods/machinery/________ vide agreement dated _______ and/or registered mortgage/ equitable mortgage created on ______ of my/our properties.

Yours faithfully,

    (Signature)

(Name of the Borrower/ Guarantor)

Dated ________