A small note on SARFAESI ACT
What is SARFAESI ACT?
It stands for Securitisation and Reconstruction of financial assets enforcement of security interest.
It allows banks to auction properties of the persons who borrow loan from the banks and who fails to replay their loans.
This act comes in the year 2002. Its main motive is to recover their loan amount and going to a court of law.
If a customer/borrower who took loan on property was unable to repay for 6 six months at a stretch will fall under this law. Banker has to give give notice for 60 days tenure (under section 13(2) & 13(4) of SARFAESI ACT) to the borrower and surety.
If the amount is not repaid in that time then bank can sell the property in public auction for closing the loan account.The price of the property will be evaluated by Professional valuers according to present market value and banks will set minimum Bid amount. These bids are published in newspapers for public auction.
If the loan amount is more than the auction amount, banker will file a separate case for recovery.