Bank loan

Hi, My father took a loan of 12.5 Lacs from HDFC Bank in January 2018. During the issue of the loan bank sold him an insurance policy (SARVA SURAKSHA POLICY) of HDFC Ergo. There was no collateral against the loan. In August 2018 my father passed away due to Heart attack. We claimed for insurance in HDFC Ergo but they declined saying they do not cover life and the policy that he had was a non-life policy covering death only in case of road accident. We asked bank for some time for paying the EMI but they sent a recovery agent in September (end) to my home for recovering the EMI. 

Then we discussed with the Bank Manager that we are unable to pay the huge EMI of 27,359.00 so please decrease the EMI. Initially, they suggested that they can waive off the interest and we will have to pay principal amount for sure. But now they are saying they can’t do anything. My father was a govt. employee and we will be getting his gratuity and earned leaves after 6 months. Please help what do now.