Banks Plan to Set up Loan Recovery by Auctioning Mortgaged Property

Here is a piece of bad news for loan borrowers! Think twice before taking loans, as you might simply lose your asset for defaulting on your home/property loan repayment. Now-a-days banks are more worried about defaulters and are increasingly resorting to the use of the Securitisation and Enforcement of Security Interest Act (Sarfaesi) 2002 to recover their loans/dues.

Under this act, whenever a borrower fails to repay his loan, banks and financial institutions have to make loan recovery by auctioning the mortgaged residential/commercial property. The act was rarely used to recover smaller dues, but now, it can be applied to recover loans/dues as low as Rs.1.5 to 2 lakh.

Officials from various banks have positively looked at the Sarfaesi act that helps in prompting borrowers to trigger loan settlements and restructuring up on auction notices. So, borrowers should ensure proper repayment in home/property loans because bank is also under obligation to recover the dues.

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