Reference

Bank auction glossary

A bank e-auction notice is full of legal shorthand. Here is what each term means, in plain English. New to all this? Start with the buyer's guide.

SARFAESI Act, 2002

The law that lets a bank recover a bad loan by selling the mortgaged property, without first going to court. Its full name is the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. Almost every bank property auction happens under it.

NPA (Non-Performing Asset)

A loan the borrower has stopped repaying for long enough — usually 90 days — that the bank classes it as bad. Marking a loan an NPA is the trigger that can lead to an auction.

Secured creditor

The lender — the bank or finance company — that holds the property as security for the loan and is selling it to get its money back.

Borrower & guarantor

The person who took the loan, and anyone who guaranteed it. Their property is the one being sold.

Demand notice — Section 13(2)

The bank's formal notice to the borrower to clear the dues, giving 60 days. It is the first legal step toward an auction.

Possession notice — Section 13(4)

The notice by which the bank takes possession of the property after the 60 days pass unpaid.

Symbolic possession

Possession on paper. The bank has legal control, but the borrower or a tenant may still be living in the property. Taking real, physical possession can then need help from the DRT.

Physical possession

The bank actually holds the keys and the property is vacant. This is the possession you want as a buyer, because you can move in or use it straight away.

Reserve price

The floor price set by the bank, based on a valuation. Bidding starts here, and the property will not be sold for less.

EMD (Earnest Money Deposit)

A refundable deposit — often around 10% of the reserve price — that you pay to take part in the auction. If you win and then fail to pay, you forfeit it.

Bid increment

The smallest amount each new bid must add above the current highest bid.

Sale notice

The public notice that advertises the auction, published at least 30 days ahead. It carries the reserve price, EMD, dates, and property details. It is the document you must read in full.

e-Auction

An online auction held on an authorised portal during a fixed time window. Registered bidders compete live, and the highest valid bid at the close wins.

Inspection

A scheduled day when interested buyers may visit and examine the property before bidding.

As is where is / as is what is / whatever there is

The standard basis of a bank auction. You buy the property in its current state, with every fault and every liability attached. The bank gives no warranty.

Encumbrance

Any claim, loan, or charge registered against a property. An Encumbrance Certificate (EC), from the sub-registrar, lists these and is a core due-diligence document.

Title deed

The document that proves who owns a property and how they came to own it. A clean chain of title is what a lawyer checks before you bid.

Confirmation of sale

The bank's formal acceptance of the winning bid, after the required payments. The sale becomes final at this point.

Sale Certificate

The document the bank issues to the winning bidder once the full price is paid. It is your proof of purchase and is registered to transfer ownership.

DRT (Debts Recovery Tribunal)

The special tribunal that hears disputes under the SARFAESI Act — for example, a borrower's challenge to a sale, or a buyer's request for help taking physical possession. DRAT is the appellate tribunal above it.

Right of redemption

The borrower's right to clear the dues and reclaim the property, which cancels the auction. Whether it still applies depends on the stage of the process — one more reason an auction is not final until the sale certificate is in hand.

KYC (Know Your Customer)

The identity and address documents you submit to register on an auction portal before you can bid.

Outstanding dues

The total the bank is owed. It also, loosely, covers other arrears tied to the property — property tax, utility bills, society dues — that a buyer may inherit.

Forfeiture of EMD

Losing your deposit. It happens if you win the auction and then do not complete the payments on time.