Mother's loan default

Hi All, I am Deepak from Bangalore, i am staying with mother and sister. She bought loan of 50000/- from co-operative bank in bangalore on 1999, she took her brother and signed all loan documents in bank. but single penny of the loan amount was not given to her. Her brother was expired on 2006 and bank has sent legal notice to my home so many times, after few days they started coming to home also for asking loan amount. Basically My mother is illiterate and she is not doing any Job at all, she has not pledged any property or ornaments, she dont have any source of income except my father's pension around 5k and I am her son taking care of all things. Now bank agent is telling you are the legal heir of the loan if in case your mother has become default. Now the loan amount has become 300000/-. We have checked with branch manager also that we will pay the loan amount plus some interest around 30 to 40k but he is telling we will reduce upto 20 percent of lump sum amount. From past 5 years they are telling that we will seize your home things and all. Now we are concentrating on my sister marriage also. I am scared if they make any unwanted scenes to sister's marriage and also advise me what steps I can take against the bank.