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  • Category: Opinion About

    Is it acceptable to take a loan for a temple from an individual or opt for bank loan?


    Constructing a temple in your village and someone has offered a loan? Check with experts here whether it is acceptable to take a loan for a temple from an individual or the better option would be to avail of a bank loan.

    We are constructing a temple in our village in Karnataka. The total project cost is around Rs 3 crores. The work has already started and we have already spent Rs. 1.2 crores collecting donations from our community people. We need urgently Rs 10Lakhs for buying wood and there is a shortage of Rs 8 Lakhs in the Bank Account. A person from the community is ready to give Rs. 8 Lakhs as a loan.

    My queries are-
    1. Can a temple accept funds as a loan from an individual?
    2. Is it a better option to avail of the loan from a local Co-op Bank?

    Kindly share your expert opinion.
  • Answers

    6 Answers found.
  • A good ,valid and practical question.

    Generally when such activities are initiated, it may be on behalf of a trust already existing or newly formed for the purpose of the construction and administration. Sometimes there may be temporary adhoc mechanism for the purpose with some well accepted and eminent persons as patrons or members.

    Banks usually lend for some productive purposes, commercial purposes which bring profit and income, income based personal consumption loans or some social purposes as per government policy. It is generally not easy to take a loan for construction of a temple, unless the spearheading entity is already linked with a bank in some way and the bank considers them and the purpose worthy of lending. Loans to trust etc. require compliance of various formalities.

    So even if your venture fulfills all the required essential parameters and bank has evaluated the worthiness and guarantee of the persons behind the venture, it may take some time to get it disbursed.

    However if you have sufficient FDs in your bank, then you can raise a loan on those FDs for temporary turnover and repay the same from donations or income coming in.
    Otherwise, the practical alternative is to take loan from well-wishing people who have some faith and interest in the venture and who lend not for any extra profit.

    It depends what conditions the lender may put. Sometimes the lender may seek a place in the committee or governing mechanism at least till the loan is liquidated. Or he may want his name to be highlighted in prominence in some way. But in such individual cases negotiation is possible and gradually a portion of the loan can be converted as donation too. That depends on the rapport, standing, intention and interest of the proposed lender to the committee and venture.

    So I suggest it is better for the concerned committee or authorised people to negotiate and get the loan from the individual lender and repay from the gradual donations coming in and also try to get some part of loan converted as donation, provided other terms and conditions are favourable. As he has volunteered for it, the better for you to accept it safeguarding the interest of the venture and legal side of it.

  • Though the purpose of construction of a temple seems to be a noble mission but to raise a loan personally for the construction of a temple may not be sanctioned unless you show them the entire list of the members indicating the name of the President or Secretary having full power of the functioning as the administrative authority.
    Here, too, the Bank - authority would like to have a valid guaranter who in the event of default of making payment of the instalment can be held responsible.
    So to get a loan for the construction of temple, you need to get your committee registered through the appropriate authority and once this process is accomplished, your President/ Secretary can approach a Bank for getting a loan sanctioned.

  • What is the mechanism for the temple accounts maintenance. Is it a registered trust or a board. What is your capacity in the management of temple. These are all the points one should think before going for a loan. A bank may not give loan so easily without showing any guarantee and other assets.
    One more point of interest is, what is the repayment methodology. Where from you are expecting the funds. Do you think you can raise required funds for repaying the loan.

    I think it is not advisable to take loan on a person and use it for temple unless otherwise the individual is ready to pay back the same as his donation to temple.

    If any devotee wants to give a loan without interest or with bank interest for construction of the temple that can be accepted after taking the consent of the committeee and after coming to an understanding about the repayment method.

    drrao
    always confident

  • If a temple is run by a trust or board then they can very well take loan from a person who is ready to give them loan but the thing is that this should be taken under a signed deed where the details of terms and conditions should be specified and terms of repayment and interest rate should be mentioned. There is some implication of tax in this as the person who is giving the loan will have to show the interest received from the temple as interest income and depending upon his other income will have to add it for the tax purposes.

    Bank will not give any loan to the temple until it is registered as a trust or as a charitable institution in the concerned state Govt office of the registrar. Even if it agrees for loan it will ask for some security like gold or FD etc.

    So better option will be to take loan from the willing persons but keep the documentation properly to avoid any disputes or complication later on.

    Knowledge is power.

  • Cooperative Banks may give loan for construction of buildings. Naturally, the documents showing that the landed property, where in the temple construction is proposed, will have to be registered and deposited with the bank. If only the loan amount with interest is remitted back the building will become free from the bank's custody. Will anybody register the temple property in the name of a bank? If that condition is acceptable the loan amount will be sanctioned. Otherwise, another property of an equivalent value, will have to be registered in the name of the bank.

    tmsankaran

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    As your motto is good and reasonable one, my view is not getting any loan from anybody. You can approach all the people known to you without any hesitation and ask their contribution even a small one. As there is a proverb says,"little drop become ocean", this method will help you a lot. Moreover, your approach should be vigorous, patience and without any hesitation. As it is for a good cause, you will get good hands to proceed.


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