Re­cov­ery of bank dues

HT Estates - - FRONT PAGE -

If the bor­rower de­faults on his loan for six con­tin­u­ous months, he is given a 60-day no­tice pe­riod but if he still fails to re­pay, banks is­sue an­other 30-day no­tice pe­riod. In case the bor­rower does not pay even dur­ing this pe­riod, his loan is de­clared part of the bank’s non-per­form­ing as­set (NPA).

Th­ese prop­er­ties are auc­tioned to re­cover losses un­der the Sar­faesi Act ( Se­cu­ri­ti­sa­tion and Re­con­struc­tion of Fi­nan­cial As­sets and En­force­ment of Se­cu­rity In­ter­est Act, 2002).

Prop­er­ties are val­ued by a pro­fes­sional valuer be­fore the auc­tion. The val­u­a­tion is gen­er­ally con­ser­va­tive as banks only try to re­cover the amount that is out­stand­ing.

Banks are not al­lowed to pocket gains from a dis­tress sale ex­cept to re­cover their dues and if the bid amount is higher than the amount of the loan de­fault, the re­main­ing amount will have to be paid back to the de­fault­ing bor­rower.

It is gen­er­ally a dis­tress sale be­cause the aim be­hind hold­ing the bid is pri­mar­ily to re­cover the par­tial amount of the prop­erty. The mar­ket price of the prop­erty in the area will al­ways be higher than the value at which the bank had loaned the prop­erty.

Those i nter­ested i n a prop­erty, sub­mit their bid to a bank along with a min­i­mum de­posit which is a cer­tain per­cent­age of the re­serve price. This amount is re­fund­able in case the bid­der de­cides to with­draw or does not win.

If the bid­der wins, he pays the 25% of the bid amount to con­firm the pur­chase and the re­main­ing amount in the next 10 to 15 days. He can avail a loan for such a prop­erty.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.