How Should Banks Respond to SARFAESI Notices When Borrowers Face Health and Financial Struggles?

Customer and Co-Borrower Details

Customer Name: XXX
Co-Borrower Name: YYY

SARFAESI Notice and Response Timeline

The bank sent a U/s. 13(2) SARFAESI notice dated 2-1-17, and the customer replied to the notice on 20-1-17. The bank received the response on 23-7-17.

Points Mentioned in the Notice

The parties agreed on the loan amount, but they are now stating that their financial conditions have worsened. XXX and YYY have both been experiencing heart problems, supported by attached medical certificates. Due to the issues caused by demonetization and their health problems, they are currently unable to repay the loan. They are requesting a six-month extension.

Bank's Required Response

The bank is required to respond to the above facts by sending a denial notice in a polite manner.

Response to SARFAESI Notice Delay

The notice under Section 13(2) of SARFAESI clearly states that the borrower(s) must lodge their response within 60 days. In your case, you received a reply after 180 days. You should have taken action under Section 13(4) of SARFAESI, as you have unnecessarily wasted time.

There is no provision for a polite reply in the act. You should have sent a possession notice and, on the date of possession, taken symbolic possession to protect the bank's interests. Please note that the bank's funds are public money, and you cannot deny any depositor premature withdrawal on the grounds that a particular borrower is experiencing difficulties and the bank will repay upon receipt of their funds.

Regards, A. Prakash.

Dear,

Sorry for the typographical error in the date received. The correct date is 23.01.2017. Please provide a suitable reply.

As I have said earlier, there is no place for humanity in law. Firstly, you should protect and secure the interests of your bank. In that line of action, you should reply to the defaulting borrower with "NOT ACCEPTED" and issue a possession notice under Section 13(4) to the defaulting borrower along with the guarantors, and fix the date and time of possession.

On the date of possession, if deemed appropriate, you may take symbolic possession of the property. You shall have to prepare a Daily Report as of the date of possession, narrating all the details of the defaulting borrower with reference to the notice issued by you under Section 13(2). Furthermore, you shall have to publish an advertisement for the knowledge of the public at large in two local newspapers in two languages, i.e., one in the vernacular language and the second in the international language, English. Please debit all the advertisement charges to the defaulting borrower's account.

Are you aware of the above procedure?

Regards, A. Prakash