Introduction
A SARFAESI demand notice marks the beginning of formal loan recovery proceedings by a bank. It is issued under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 when a loan account is classified as a Non-Performing Asset (NPA).
This notice is not just a warning. It gives borrowers a legally defined time period to act before the bank takes stricter steps like property possession or auction.
Time Limit Given Under SARFAESI Act
The law provides a 60-day period to the borrower from the date of the notice.
During these 60 days, the borrower can repay the outstanding dues or respond to the bank. The bank cannot take possession of the secured asset within this period.
What You Can Do Within 60 Days
The 60-day window is a crucial opportunity to resolve the issue.
You can repay the full amount and stop further action. You can also send a written reply to the bank if you find any errors in the notice.
In cases of financial difficulty, you may request restructuring or a one-time settlement. Many disputes are settled at this stage.
Borrower’s Right to Raise Objections
The SARFAESI Act allows borrowers to raise objections during this period.
You can challenge incorrect calculations, unfair charges, or even the classification of your account as an NPA.
The bank must consider your representation and respond with reasons if it rejects your objections.
What Happens After 60 Days
Failure to act within the 60-day period allows the bank to proceed under Section 13(4).
At this stage, the bank can take possession of the secured property and initiate recovery actions such as sale or auction.
Can the Time Be Extended
The Act does not provide any automatic extension beyond 60 days.
However, banks may allow additional time if the borrower is actively negotiating or making partial payments. This depends on the bank’s discretion.
Legal Remedy After Notice Period
Once the bank takes action under Section 13(4), the borrower can approach the Debt Recovery Tribunal.
The tribunal examines whether the bank has followed the proper legal process.
Conclusion
A SARFAESI demand notice gives borrowers a strict 60-day period to respond or repay their dues. This time frame is critical. Acting promptly can help prevent further legal action and protect your property.
