The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 — commonly known as SARFAESI — gives banks and financial institutions a faster route to recover dues secured against collateral, without first approaching a civil court. For borrowers, understanding this process is often the difference between responding effectively and losing valuable time.
How the process typically begins
Once a loan account is classified as a Non-Performing Asset (NPA), the lender issues a demand notice under Section 13(2), giving the borrower 60 days to clear the outstanding dues. If the dues remain unpaid, the bank can proceed to take possession of the secured asset under Section 13(4), and eventually sell it to recover the debt.
What borrowers can do
Borrowers are not without recourse. Objections to the demand notice can be raised within the 60-day window, and the bank is required to respond to those objections in writing. If possession proceedings continue despite valid objections, an appeal lies before the Debt Recovery Tribunal (DRT) under Section 17 of the Act.
- Respond to the Section 13(2) notice in writing within the stipulated period
- Keep records of all correspondence and payments with the lender
- File an appeal before the DRT if possession action proceeds unfairly
- Seek legal advice early — timelines under SARFAESI are strict
Why timing matters
Most of the disputes that end up dragging on could have been resolved faster with an early, well-drafted response. Whether you are a bank pursuing recovery or a borrower contesting a notice, the strength of your position often depends on how promptly and precisely the first response is made.
This article is for general informational purposes only and does not constitute legal advice. Every matter has its own facts — please consult directly for guidance specific to your situation.