What is SARFAESI?
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, SARFAESI for short, lets banks and financial institutions recover non-performing loans by taking possession of and selling the assets a borrower pledged as security, without first going to court.
When a borrower defaults, the bank can seize the collateral, a house, a plot of land, gold, a vehicle or machinery, and sell it through a transparent public e-auction. For buyers, this is an opportunity to acquire assets, often below market value, directly from the lender.
How an auction works, step by step
- 1
Demand notice (Sec 13(2))
The bank issues a 60-day demand notice to the defaulting borrower to repay the outstanding dues.
- 2
Possession notice (Sec 13(4))
If unpaid, the bank takes symbolic or physical possession of the secured asset.
- 3
Valuation & reserve price
An approved valuer assesses the asset; the bank fixes a reserve price, the floor for bidding.
- 4
Auction notice
A public notice is published (newspaper + portal) at least 30 days before the sale, with date, EMD and terms.
- 5
Inspection & EMD
Interested buyers inspect the asset and deposit the Earnest Money Deposit before the deadline to qualify.
- 6
E-auction
Bidding happens online on the bank's official platform. The highest bid above reserve wins.
- 7
Sale & registration
The winner pays the balance (usually within 15 days), receives a sale certificate and registers the asset.
Reserve price & EMD
Reserve price
The minimum price set by an approved valuer. Bids must start at or above it. Because it targets loan recovery, it's frequently below open-market value.
Earnest Money Deposit
A refundable deposit (typically 10% of reserve) paid before the auction to qualify. Refunded if you don't win; adjusted against the price if you do.
Buyer's due-diligence checklist
- Verify the title chain and ownership history of the asset.
- Confirm whether possession is physical or symbolic, symbolic may need eviction.
- Check for other encumbrances, dues (property tax, society) or pending litigation.
- Inspect the asset physically on the inspection date.
- Read the full auction notice and terms & conditions carefully.
- Arrange funds, EMD upfront, plus the balance within the bank's deadline.
- Understand that auction sales are usually 'as is where is' and 'as is what is'.
Disclaimer
GHAR1 aggregates publicly published auction notices for informational purposes only. We are not affiliated with any bank, financial institution or the Government of India, and we do not conduct auctions or handle payments. Always verify every detail against the bank's official notice and seek independent legal advice before participating in any auction.