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SARFAESI Notice Received: A Borrower’s Guide to the Steps and Time Limits

Debt Recovery · SARFAESI 2002

If a bank or NBFC has sent you a notice under the SARFAESI Act, time limits start running. This guide explains the usual steps. General legal information only.

The usual sequence

  1. Classification as non-performing asset: The lender classifies the account under its regulatory norms.
  2. Section 13(2) demand notice: The borrower is called upon to discharge the liability, ordinarily within 60 days.
  3. Reply and objections: The borrower may respond with reasons; the lender must consider them and communicate its decision.
  4. Section 13(4) measures: If the liability is not discharged, the lender may take possession of the secured asset, take over management, or appoint a manager, and may proceed to sale.
  5. Possession through the court: The lender may seek the help of the Chief Metropolitan Magistrate or District Magistrate under Section 14.

Challenging enforcement

A borrower or other aggrieved person may file an application under Section 17 before the Debts Recovery Tribunal (DRT), ordinarily within 45 days of the measure taken. Appeals lie to the Debts Recovery Appellate Tribunal (DRAT), which has a pre-deposit requirement. Time limits are strict, so take advice early.

What to do on receiving a notice

  • Note the date of receipt and the date on the notice.
  • Collect the loan agreement, security documents, account statements and earlier notices.
  • Do not ignore the notice or transfer the secured asset.
  • Take advice before replying, and keep proof of any reply sent.

For lenders

The firm also advises banks and NBFCs on notices, possession proceedings and recovery strategy. See debt recovery and SARFAESI.

How can Wise & Partners help?

The firm can review the notice and documents, advise on the reply and on any DRT application, and appear in the proceedings. No outcome can be promised.

Send an enquiry

Important disclaimer: This article is general legal information, not legal advice. It does not create a lawyer-client relationship and is not an advertisement or solicitation under Bar Council of India rules. Verify current statutes, rules and judgments before relying on it.