What the notice is
A notice under Section 13(2) of the SARFAESI Act is the first formal step a secured creditor takes after classifying a loan account as a non-performing asset. It calls upon the borrower to discharge liabilities in full within 60 days of the notice. If the borrower fails to do so, the bank becomes entitled to enforce its security under Section 13(4).
What a valid notice must contain
The notice must be in writing and must state the amount payable, the details of the secured assets proposed to be enforced, and the consequence of non-payment. It must be served in the manner prescribed by Rule 3 of the Security Interest (Enforcement) Rules, 2002. Errors in the amount, missing asset descriptions or improper service are frequently raised as grounds of challenge before the Tribunal.
Steps to take immediately
Do not ignore the notice. Collect the loan agreement, sanction letter, statements of account and every earlier communication from the bank. Check the date on which the account was classified as an NPA and whether the amount claimed matches your own calculation. Note the date of receipt and the date the notice period ends.
Replying to the notice
Section 13(3A) allows you to send a written representation or objection within the 60 days. A well drafted reply sets out disputed amounts, wrongly charged interest or penalties, procedural defects and any genuine settlement proposal.
The bank must consider the representation and, if it rejects it, communicate its reasons within 15 days. This reasoned rejection matters because it can later be examined before the Debts Recovery Tribunal, although the rejection is not itself directly appealable.
Exploring settlement
Many lenders are open to restructuring or a one time settlement during the notice period, particularly where the security is under stress. A written proposal backed by an initial payment often changes how the bank proceeds.
What happens after 60 days
After the period expires the bank may issue a possession notice and proceed with measures under Section 13(4). From that point the borrower has 45 days to file an application under Section 17. Waiting for the last date is risky, so seek advice while the 60 days are still running.
Frequently Asked Questions
Q. Can the 60 day period be extended?
A. The Act does not give the borrower a right to an extension, but the bank can agree to more time or a settlement in writing.
Q. Should I reply even if I dispute the amount?
A. Yes. A reasoned reply under Section 13(3A) puts your objections on record and obliges the bank to respond with reasons.
Disclaimer: This article is for general information only and is not legal advice. The law may change, and the facts of each matter differ.