Bank Law Helpline


The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI) Act was legislated to assist the banks and financial institutions to take possession of property/assets secured against loans and sell them. SARFAESI Act is a powerful tool for the banks to recover loan amounts for the non-performing assets and defaulted loans without much intervention of courts. However, this law gives utmost power in the hands of financial institutions which has been sometimes misused by some financial institutions to armtwist and harass the borrowers.

Under S.13 of the Act, the bank can issue notice to the borrower to discharge his loan liabilities within 60 days failing which under s.13(4) the bank can take possession of the property and auction the property to recover the loan amount. Now if the borrower resists, under s.14 of the Act, the Bank can take assistance of the Magistrate, the order of which is unqeustionable before any Court according to S.14(3). The only recourse a borrower has is to file an appeal under s.17 of the Act after the Bank has taken possession of the property.

If you want to know how to deal with demand notices, possession & sale of properties by banks under Securitisation Act.
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