Sarfaesi act withdrawal (section 13 2)

Bank can withdraw Demand Notice u/S13(2) after considering your representations. If you are not happy with the said bank try for take over of loan by another bank whom you feel better. In the loan agreements banks include the penal charge clause and hence you cannot complain.

Thanks for he response..Mr, Raju

can more light be put in for the queries posted as I had mentioned that bank hasn't considered problems practically and haven't done any reschedulement e.t,c

regards

 You will have to take a practical view.

1) Bank has withdrawn notice, as it appears, account is yet not NPA, as you say they have warned for the same.

2) Rates of interest will be governed by the contractual rate. It is not uncommon to banks making mistakes in applying interest rate. This is a matter of fact and you have to satisfy yourselves.

3) Best method is to keep approaching the bank to work  out a reasonable One Time Settlement proposal, harping on the inadequacy of cash flows to service the debt. You may also point out other liabilities of the unit to the bankers.

4) It is advisable to defer paying anything to the bank till bank agrees for OTS / reschedulment or some arrangement in writing. Otherwise money paid will get adjusted in penal interest, keeping liability at the same level. Liquidity will help you to better negotiate with the bank as also go for legal options effectively. DRT will insist for some payment to grant any relief, in case you have to approach DRT against SARFAESI notice / other Recovery proceedings at a later date. Bank is also in need to keep account standard as at year / HY end

5) Since value of security is much more than dues, it is not advisable to delay. With liquidity and security, try to give a proposal to make payment against release of individual securities.

Hello Mr. VM Dahake,

I really appreciate your reply. There have been several proceedings in the case as the post was around 2 months ago..

1) Bank has again proceeded with section 13-2 notice and the previous representations still remain intact. Does it sound viable to again send notice without considering any of the greviances put up by borrower and just mentioning "Considering your problems sympatheically"

2) Also, I had read somewhere that "That before declaring NPAS, bankers have numerous duties to perform including rehabilitation not only once but multiple times" as quoted by R.B.I guidelines. They havent adhered to this too..Kindly suggest

Coming on to to reply --

3) Best method is to keep approaching the bank to work  out a reasonable One Time Settlement proposal, harping on the inadequacy of cash flows to service the debt. You may also point out other liabilities of the unit to the bankers. >>> We had already moved towards having O.T.S and asked the bank to mainly provide us moratorium along with other factors which wasnt provided in initial phase for the project and this has been also major cause for such bad debt. The bank opted out to back out after good amount of funds had been deposited as mentioned earlier and instead, preferred to move with further proceedings.

4) It is advisable to defer paying anything to the bank till bank agrees for OTS / reschedulment or some arrangement in writing. Otherwise money paid will get adjusted in penal interest, keeping liability at the same level. Liquidity will help you to better negotiate with the bank as also go for legal options effectively. DRT will insist for some payment to grant any relief, in case you have to approach DRT against SARFAESI notice / other Recovery proceedings at a later date. Bank is also in need to keep account standard as at year / HY end >>> Yes, totally agreed as this has been suggested by others too because we are very much present in such stage where liquidity is not much and funds are required to meet up with recurring expenses for the project too for which financial assistant had been take. Also, We could not any sign of relief now from bank as they had opted out of settlement. Thanks for the advise

5) Since value of security is much more than dues, it is not advisable to delay. With liquidity and security, try to give a proposal to make payment against release of individual securities. >> Not much of liquidity

Looking forward to your valuable suggestions

regards

Hi Mr. Aman,

 Bank's action on expected lines. In my opinion,

1) You need to reiterate the representation ( reply to notice) with further additions as may be warranted. Please give exhaustive reply, counter claim etc. as it may be of some use at a later date, although most probably bank would deny whatever you say.

2) Banks have to consider the OTS request but it can not be binding on them to accept particular terms. In your case it is advisable to talk to the bank and arrive at some understanding / OTS / reschedulement etc.

3) You can always harp on the fact of depositing funds, circumstances under which deposited and so on. Same will have some ( but only limited ) value.

4) Again, try to solve by close co-ordination with bank. Convince bank that there would be less sacrifice for bank and win a win situation if settlement is agreed upon instead of recourse to Securities mortgaged. For you also business expediency and salvaging the situation should be a priority.

Hi Mr. V.M Dahake,

Really appreciate your suggestions..thanks

1) Had more incorporations as you said making the representation more exhaustive

2) Let us hope that this day comes when they are ready for restructing/reschedulement e.t.c. Till date, not such move as they are mainly focused presently on gettings funds deposited anyhow which we refrain due to reasons mentioned above by you

4) The bank is behaving like "bunch of babus" so cant say presently if they are willing to do some kind of settlement

regards

Banks interest rates may vary even during the pendency of the SARFAESI proceedings; since rate of interest is depending upon the base rate fixed by the bank from time to time, unless your loan is not under floating rates. Unless RBI is imposing any scheme for OTS, it is the discretion of bank to decide OTS.

Thanks Mr. Raju for the response..appreciated

How about if the bank has started referring to our company to which the loan has been sanctioned as "fake" in their reply to notice??