Credit Denial Letter
A credit denial Letter is written by the bank to its customer who has put in the request for credit. The bank can deny giving credit on several grounds. However, the bank is obliged the inform the client on what grounds credit is being denied to that particular client.
In several instances when credit is being denied, the bank appoints a relationship manager to the client so that the necessary changes can be made for the client to get access to additional credit needed. Credit can be denied not only from banks but from financial companies as well. These companies can deny extending or giving loan to certain individuals for carrying out certain projects. It is always advised to politely decline the client along with a legitimate reasoning. End the letter in a polite, formal and objective manner, which states that the client can approach the bank/ institution in case of any further queries.
Subject: Credit Denial Letter
This letter is in response to your application dated 10th May ’17 for renewal of your existing credit loan in your name. The Bank regrets to inform you that we will not be able to proceed with your request.
After thorough analytics of your current credit loan and research into your case, our finance team has concluded that they will not be able to grant you extra credit or extension on the current loan.
You were granted a loan on 1st May 2016 for the purchase of a motorbike. The terms of this credit loan required you to repay the loan within one year’s time, that is by 1st May 2017 with a 10% interest rate. However, according to our records, you have not only failed to pay the interest rate of 10% but have also not paid the required sum of INR 10,000 since March 1st 2017. Due to your inability to meet with the terms and conditions of the loan the bank will no longer be able to entertain any credit requests on your behalf.
Also, in adherence to our bank policy if you are not able to the sum borrowed along with an interest rate of 20% (10% interest rate + 10% fine due to your inability to pay on time) The bank will be left with no other option than to seize your collateral, which in your case is Gold rings worth INR 2,000.
You are requested to fulfill the conditions of your loan by 31st July 2017, otherwise we will be forced to take strict actions against you. Kindly contact your relationship manager for more details.