Bank asking for amount 6 times of principal.

In 2000 my dad had taken a salary loan of 90000/- from a cooperative bank he was working in. Due to personal reasons, he decided to leave job in 2002. Per discussion with his manager over phone in 2002, he had sent his resignation and application to credit proceeds from PF, gratuity and security deposit to loan account and close off the loan account which bank did not do in 2002. In 2012, he came to know about not closure of loan account from his colleague. We agree that we did mistake of not visiting/following up with bank on this matter but still it is also responsibility of the bank to act on the application we sent. So in 2012, he went to bank and that time bank had agreed to do settlement of loan by paying off some additional amount to bank and also submitted his PF withdrawal forms. This communication of one time settlement was verbal and on trust. Now suddenly in last week after almost 6 years, bank official called him up and said there is a huge outstanding of Rs. 6 lacs in his loan account. Bank had never called him in last 6 years for the same. My dad is also retired now and cannot afford to pay such a huge amount. Still even after all of this happened, we proposed bank to do settlement again by paying some small amount but bank is denying that same (again this is verbally). We proposed this just because of our mistake of not having things documented and we did not take closure letter. What should he do now? Should we file a complaint against bank in consumer court and how is the overall process? I also heard that for cooperative banks time barred limitation of 3 years is not applicable. Also, what is the risk guarantors bear in this matter if my dad refuse to pay such a huge amount. We don't want guarantors to suffer because of us and we also don't want to unnecessarily pay for mistakes of bank though some mistakes like trusting and not taking closure letter etc. are there from our end. Please advise.