The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) lets secured creditors enforce their security without going to court once a loan account is classified as a non-performing asset (NPA). The first formal step is a demand notice under Section 13(2).
The timeline at a glance
| Stage | Time | Provision |
|---|---|---|
| Demand notice to pay the outstanding dues | 60 days to pay | Sec. 13(2) |
| Borrower's representation or objection | Within the 60 days | Sec. 13(3A) |
| Lender's reply with reasons for rejection | 15 days | Sec. 13(3A) |
| Possession / other measures if dues are unpaid | After 60 days | Sec. 13(4) |
| Securitisation application before the DRT | 45 days from the measure | Sec. 17 |
| Appeal to the DRAT | 30 days | Sec. 18 |
Step 1: Read the notice carefully
Check the amount claimed, the date of NPA classification, the account statement, the description of the secured assets and whether all borrowers and guarantors have been served. Errors here can form the basis of your objection.
Step 2: Send a representation under Section 13(3A)
A written representation can dispute the amount, the NPA classification or the procedure, or propose a restructuring or settlement. The lender must consider it and communicate reasons within 15 days if it does not accept it. The Supreme Court has treated this as a mandatory safeguard.
Step 3: If possession is taken
Any person aggrieved by measures under Section 13(4), including the borrower, a guarantor or a tenant, can file a securitisation application under Section 17 before the Debts Recovery Tribunal within 45 days. The DRT can examine whether the measures complied with the Act and the Rules, and can grant interim relief in suitable cases.
Step 4: Settlement
A one-time settlement (OTS) is often possible at any stage. Negotiating with the bank in parallel with legal remedies keeps options open.
Act early. The most options exist at the notice stage. Once the asset is sold, unwinding the sale is much harder.
This article is general information and is not legal advice. Facts matter, so please consult an advocate about your situation.