Openai/691ad554-9a84-8013-9f03-88f504a7c3f7

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User: if the father takes a personal loan with SBI Bank and then passes away, is the legal heir liable to pay it off?

if the father takes a personal loan with SBI Bank and then passes away, is the legal heir liable to pay it off?

Assistant: Short answer: Usually NO — the legal heir is not personally liable to pay the deceased borrower’s SBI personal loan fro…

Short answer: Usually NO — the legal heir is not personally liable to pay the deceased borrower’s SBI personal loan from their own money. But the bank can claim from the estate left behind.

Here’s the detailed explanation:

✅ 1. Personal liability of legal heir

If a borrower dies, his legal heirs do NOT inherit the debt, only the assets. So the bank cannot force the heir to pay from his/her personal income or savings.

✅ 2. But the loan must be settled from the deceased’s estate

Banks (including SBI) can recover the outstanding personal loan from:

• Money in the deceased’s bank accounts
• Fixed deposits
• Property left behind
• Any other assets forming the estate

If the estate is smaller than the debt, the bank can recover only up to the value of the estate. The heirs' own wealth is not touchable.

✅ 3. If the loan had insurance (optional)

Many personal loans come with an optional loan protection insurance / credit life policy.

If such insurance exists:

• The insurer pays off the loan
• Heirs owe nothing
• Bank closes the loan

You can check the loan documents or call the branch.

✅ 4. What if the estate has no assets?

Then the bank has to write off the loan. The heirs cannot be forced to pay, and their CIBIL score is not affected.

⚠️ Exceptions

Only two scenarios can make an heir indirectly liable:

1. If the heir has signed as a co-borrower / guarantor: Then the bank can recover from that person.
2. If the heir willingly takes ownership of a mortgaged asset (not relevant for personal loans, applies to home loans).

For a normal SBI personal loan taken solely by the father, heirs are not liable.

If you want, I can check whether SBI’s loan insurance typically covers death, or guide you on how to inform the bank and close the loan.