Whether bank can give a business loan to a HUF?
This query is : Resolved
05 August 2016
Whether bank can give loan to Hindu Undivided Family ?
Type of Loan : Business Loan
Lender : Public sector bank
Borrower :Proprietor Ship
Proprietor : HUF
Collateral Security : Immovable Property in Karta's individual name.
03 August 2025
es, a bank can give a business loan to a Hindu Undivided Family (HUF).
Key points:
HUF is a recognized separate entity for income tax and banking purposes.
Banks do provide business loans to HUFs for business purposes.
Loan is taken in the name of the HUF, and the Karta (head of the HUF) generally signs the loan documents.
Collateral security can be in the individual name of the Karta or other family members, but banks usually prefer the security to be in the name of the borrowing entity (HUF) or guarantor.
The bank will evaluate the creditworthiness of the HUF and the Karta, along with the value of the security.
In your case:
Loan to HUF is fine as a business loan.
Collateral security in the Karta’s individual name is acceptable, but the bank may require additional documents or guarantees to cover this.
Key points:
HUF is a recognized separate entity for income tax and banking purposes.
Banks do provide business loans to HUFs for business purposes.
Loan is taken in the name of the HUF, and the Karta (head of the HUF) generally signs the loan documents.
Collateral security can be in the individual name of the Karta or other family members, but banks usually prefer the security to be in the name of the borrowing entity (HUF) or guarantor.
The bank will evaluate the creditworthiness of the HUF and the Karta, along with the value of the security.
In your case:
Loan to HUF is fine as a business loan.
Collateral security in the Karta’s individual name is acceptable, but the bank may require additional documents or guarantees to cover this.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- TDS on Purchase of Immovable Property by NRI from NRI
- Current Account Opening for Sole Proprietorship with Udyam Certificate - Zero Turnover
- Capital gain from sale of house property
- INTEREST APPLICABLE ON ITC REVERSAL PORTION
- FORM 26A APPLICABILITY
- Multiple trade mark
- Before GSTAT- APL-02 Vs APL-04
- Annual return in Gst
- Regarding TDS Applicability For Director Remuneration
- Value of property in capital gain
- Opting our of sec 44AD
- GST Treatment of Insurance Commission for Existing GST Holder
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
