NPA Remedy

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

27 July 2010 Case: An Assessee have taken Home Loan and was unable to pay installments on time.

Now,Bank issued a letter of NPA to the assessee and gave him the time of 60days.

Is there any remedy available to an assessee...??

Querist : Anonymous

Querist : Anonymous (Querist)

30 July 2010 No reply ?????

Querist : Anonymous

Querist : Anonymous (Querist)

30 July 2010 ???

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CA SURENDRA KUMAR RAKHECHA

CA SURENDRA KUMAR RAKHECHA (Expert)
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02 August 2010 No remedy except to pay instalments.

The consequences of non-payments would be more harsh than the present difficulties being faced by the assessee.

Recovery proceedings may be started by the bank. They can sell the house also.

After introduction of DRT (Debt Recovery Tribunal) Proceedings; powers have been granted to the banks to recover their loans without referring the matter to the court.

Querist : Anonymous

Querist : Anonymous (Querist)

02 August 2010 If after receiving letter..an assessee pays all due installments...then bank have right to sell house or not ??

Querist : Anonymous

Querist : Anonymous (Querist)

02 August 2010 If after receiving letter..an assessee pays all due installments...then bank have right to sell house or not ??

VINOD ARORA

VINOD ARORA (Expert)
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03 August 2010 If the account is regular, then bank can not do such isolated moves of selling the mortgaged asset to settle their outstanding dues.

Querist : Anonymous

Querist : Anonymous (Querist)

03 August 2010 Actually,assessee have received letter from bank and given a time period of 60days to clear all dues.

Total Loan taken : 20 Lacs
Amount to be paid: 16 Lacs

At the time, letter was received...amount to be paid is : 21 Lacs

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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03 August 2024 If an assessee has received a letter from the bank declaring the account as Non-Performing Asset (NPA) and has been given a 60-day notice to clear all dues, here’s what needs to be considered regarding remedies and potential actions by the bank:

### **1. Understanding NPA Status and Remedies:**

**NPA Status:**
- When a loan account is declared as NPA, it means that the borrower has defaulted on the repayment of the loan for a certain period, typically 90 days.
- The declaration of NPA gives the bank certain rights to recover the dues, which may include initiating legal action or selling the property.

**Remedies Available:**
1. **Clear the Dues:**
- **Pay the Outstanding Amount:** If the borrower pays the total outstanding amount within the 60-day notice period (including any accrued interest and penalties), the bank must accept the payment and restore the account to a standard status, provided the payment clears all dues.
- **Negotiate with the Bank:** Contact the bank to discuss any possible restructuring or settlement options if full payment is not immediately feasible. Sometimes, banks may offer a revised repayment plan or settlement if you are unable to pay the full amount at once.

2. **Legal Recourse:**
- **Challenge the NPA Status:** If you believe the NPA declaration was incorrect or unjustified, you can file a complaint with the Banking Ombudsman or approach the court to challenge the NPA status. However, this process can be lengthy and may not stop the immediate recovery actions.

### **2. Bank's Rights Post-NPA Declaration:**

- **Right to Recover Dues:** Once an account is declared NPA, the bank has the right to recover the dues by various means, including:
- **Initiating Recovery Proceedings:** The bank may start legal proceedings under the SARFAESI Act, 2002 (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) to recover the amount.
- **Selling the Property:** The bank can initiate proceedings to sell the secured asset (e.g., the house) to recover the outstanding loan amount if the dues are not cleared.

### **3. Specific Case Details:**

- **Outstanding Amount:** In your case, the loan was for ₹20 lakhs, and the amount to be paid is ₹16 lakhs, with a total amount due being ₹21 lakhs at the time of the letter.
- **If the Assessee Pays All Dues:**
- **Full Payment:** If the assessee pays ₹21 lakhs (which is the total amount due), the bank should accept the payment and will generally not have the right to sell the property.
- **Settlement or Reconciliation:** Ensure that any payment made is duly acknowledged by the bank, and get a confirmation that the account has been restored to a standard status and no further action will be taken.

### **4. Steps to Take:**

1. **Contact the Bank Immediately:**
- **Discuss Payment:** Inform the bank of your intention to clear the dues and seek a confirmation of the exact amount required to settle the account.
- **Obtain Written Confirmation:** Ensure you receive written confirmation from the bank that the account will be restored to a standard status upon full payment.

2. **Ensure All Payments are Properly Recorded:**
- **Receipt of Payment:** Obtain a receipt for all payments made and ensure that the bank updates your account status accordingly.

3. **Consult Legal Assistance:**
- **Seek Legal Advice:** If there is any confusion or dispute, consult with a legal advisor who specializes in financial or banking matters to ensure that your rights are protected and the matter is resolved appropriately.

### **Summary:**

- **Clear All Dues:** Pay the total outstanding amount (including any penalties) within the 60-day period.
- **Confirm Status:** Obtain confirmation from the bank that your account will be restored to a standard status and that no further recovery action will be taken.
- **Seek Legal Help:** If needed, consult with a legal expert for advice on challenging the NPA status or understanding your rights.

Taking these steps can help ensure that the NPA status is resolved, and the property is not sold if you clear the dues within the specified period.