Recovery of loan: Legal questions
Hello sir, I'm Omkar Keni and I need your guidance and expertise in my case. My case is as follows, 1- I took loans from a Nationalised bank in 2011. 2- Bank financed me Rs. 750,000, as term loan and Rs. 150,000 as Cash Credit for which bank took my shop as collateral security. 3- My both accounts were classified as NPA and I received SARFAESI notice on 13/10/15. 4- In the said notice bank, showed outstanding of Rs. 6,67000 in the term loan account and Rs.146000 in CC account. 5- I met the bank manager and explained him my problems and started repaying in both the accounts. 6- Bank took overdue interest for my cash credit account and regularised it. Now I'm paying interest regularly in the said CC account 7- I'm also paying some amount regularly in my Term loan account which has reduced to Rs.4, 20,000 as on today. 8- Even after my above repayment, bank sent me possession notice on 08/03/17 based on the SARFAESI notice dated on 13/10/15 instead of stating facts that one loan is regularised and other one is reduced by more than 2 lacs. 9- As bank mortgaged my shop for both the loan accounts and when out of those 2 loan accounts,1 CC loan account is regularised and as I'm paying regularly in the term loan account which has resulted in the reduction of balance to Rs.4,20,000 from Rs.6,67,000 In this circumstances the possession notice is valid? Or it is sent deliberately to harass me ?
In case of possession/ sale of Immovable Asset (House/property/land) bank has to follow these guidelines-
- A notice will be sent to the borrower u/s 13(2) of the SARFAESI Act. This can be done only after the loan is classified as an NPA as per the guidelines set by the RBI.
- The customer will be allowed 60 days, post issuance of the notice, to regularise the account or come forward to settle the account.
- If the borrower refuses to pay, then the authorised officer will ask for the physical possession of the mortgaged property by handing over the demand possession notice to the borrower.
- The bank shall proceed with the auction of the attached property after 30 days of taking possession of the property. This is in the event, that the customer does not come forward and settle the loan. The bank shall send the customer a letter intimating him about the venue of the sale, indicating date and time of the same.
- The bank will consider handing over the possession of the property to the borrower any time after repossession and before concluding the sale transaction of the property, provided the bank dues are cleared in full.
You are also allowed these rights-
Right to Notice
When you fail to pay the loan dues, the bank can’t take any immediate action against you. If you haven’t paid EMIs for 90 days, the bank must serve you a notice of 60 days. Once the notice period is over and if the dues are still unsettled, then the bank is allowed to repossess your property. And before the bank can sell off your property, it has to serve yet another notice of one month informing you about the same.
Right to be Heard
Within the one month notice period, before the property is auctioned, a loan defaulter can file a representation to the authorities and raise objections towards selling off the property. The loan officer has to then respond to the representation and give valid reasons for turning down your objections within seven days.
Right to Fair Value
If the bank has repossessed your property due to a loan default, it does not give them the sole right to decide the sale price of the property. Along with the one month notice informing the customer about the auction of the property, the bank has to send a fair value notice that clearly states the sale price of the property as assessed by the bank officials. However, if you feel that the bank is selling it off at an under-priced rate, then you can raise objections and declare a price that you feel is reasonable. The bank has to consider your plea to receive fair value for your property and will have to revaluate the property once again.
Right to Balance
Since the rates of property are steeply rising with each passing day, there is a possibility that there might be a fair amount of balance left after the bank has settled the loan by selling off your property. You are entitled to get that balance amount as the bank has no claim on it once the loan is settled.
Right to be Treated Politely
Banks are registered organisations and can’t act like independent money lenders when it comes to a loan default. In the past there have been reports of harassment and mistreatment of loan defaulters by collection agents but now banks have decided to follow a code of conduct that is polite and respectful. A collection officer has to politely request to meet you and the place and time of the meeting can be as per your convenience. If you don’t respond to the request, the collection officer may meet you at your home or work place. Also, the agent can meet you only between 7 AM and 7 PM and can’t harass you late at night or in the wee hours of morning. The collection agents are supposed to treat the defaulters in a respectful manner without resorting to abusive language and mistreatment.
If these guidelines were not followed, which seems to be the case here, I believe you should complain against this action of the bank. You can follow these steps-
- Lodge a complaint, in writing, with the branch concerned.
- If your grievance is not redressed at the branch within 15 days or you do not receive any communication from them, you may approach the higher authorities of the bank (Regional / Zonal Manager) whose contact details should be available at the branch.
- If you do not receive a reply within 30 days of lodging your complaint with the bank or you are not satisfied with the reply, you may approach the Banking Ombudsman under whose jurisdiction the branch falls. The Banking Ombudsman is a high ranking official directly working for the RBI who can assist you. The contact details of the Banking Ombudsman should be available at the branch as also at www.rbi.org.in>Home>MoreLink>Complaints>Banking Ombudsman Scheme
The following is the process for lodging an online complaint with the Banking Ombudsman-
• You will be asked “Have you made a written complaint to the bank?”. Click “YES” If you raised a complaint to bank. If you clicked "Yes", then the system seeks inputs on "If Yes, Whether 30 days are over form the lodgement of complaint to the bank or not satisfied with Bank's reply ?”. Click “YES” if your complaint satisfies with the condition.
• You will be asked to fill Bank name, Account no., Complaint name, Mobile no.
• Once you fill up the details, website will redirect to complain form.
• Select BO office (Banking Ombudsman
• Fill up the form with necessary details like Name, address, bank name, complaint category, description of complaint etc. Click “SAVE”
• After successfully submission of your application, user can upload supporting documents by clicking on upload option. Supporting document means copy of complaint, bank reply, evidence etc.
You will get acknowledgement of complaint once review is done by Ombudsman. Within 30 days from your complaint, Ombudsman will resolve the issue. They may contact you if any clarification require. For more detail please visit
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