SARFAESI Section 13(2) demand notice checklist

Key time limits

Before drafting

• The account is classified as NPA under the applicable RBI income-recognition norms, and the NPA date is on record.
• The amount due is at least ₹1 lakh and not less than 20% of principal and interest (Section 31(j)).
• The security is not agricultural land (Section 31(i)) and the loan is not otherwise excluded.
• For an NBFC, the entity and loan size meet the notified SARFAESI eligibility thresholds.
• The officer signing is a duly appointed authorised officer, with the board or delegated authority on file.
• Loan, security and guarantee documents are complete, stamped and within limitation.

Contents of the notice

• Addressed to every borrower, co-borrower, guarantor and mortgagor, each by full name and address.
• States the amount due with the date up to which it is calculated, and future interest and costs.
• Lists every secured asset proposed to be enforced, with a description that identifies it.
• Calls on the borrower to discharge the liability in full within 60 days from the date of the notice.
• Draws attention to Section 13(8): the borrower's right to redeem the secured assets before the sale notice is published.
• Mentions that the borrower may not transfer the secured assets without consent (Section 13(13)).
• Dated, signed by the authorised officer, on the lender's letterhead with a reference number.

Service (Rule 3)

• Sent to each addressee by speed post, registered post with acknowledgement, approved courier or hand delivery.
• Proof of dispatch and delivery (tracking report, acknowledgement or signed copy) kept for every addressee.
• Where service fails or the borrower avoids it: notice affixed on the property and published in two leading newspapers, one in the local language.
• Copies of the newspaper publications, with dates, kept in the file.

After dispatch

• Diary the 60-day date for each addressee, counted conservatively from the last proven delivery.
• Any representation or objection is replied to with reasons within 15 days (Section 13(3A)).
• No 13(4) step is taken until the 60 days have ended and any objection has been answered.
• Payments received after the notice are recorded and the amount due is updated before the next step.