How the bank take possession of the property under SARFAESI Act

Shivendra Pratap Singh

Advocate

High Court Lucknow

Article | SARFAESI

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Under the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act of 2002 in India, a bank can take possession of the property if the borrower is in default of the loan. The steps for the bank to take possession of the property under the SARFAESI Act are as follows:

  1. Demand notice: The bank must first serve a demand notice on the borrower in writing, specifying the amount of debt owed and the steps that will be taken if the debt is not paid.
  2. Representation by the borrower: If the borrower disputes the demand notice, they must file a representation with the bank within the specified time frame.
  3. Possession order: If the representation is not accepted by the bank, the bank may apply to the Debts Recovery Tribunal (DRT) for an order for possession of the property.
  4. Appointment of authorized officer: Once the DRT grants an order for possession, the bank may appoint an authorized officer to take possession of the property.
  5. Physical possession of the property: The authorized officer may take physical possession of the property, either with the assistance of the local police or by breaking open the locks if necessary.
  6. Sale of the property: Once possession of the property is taken, the bank may sell the property to recover the debt.

It’s important to note that the SARFAESI Act provides a framework for the enforcement of security interests by lenders and the rights and obligations of borrowers. The process for taking possession of the property under the SARFAESI Act is subject to legal and procedural requirements, and borrowers should seek legal advice if they have any questions or concerns.