Ever wondered how banks recover loans when borrowers stop paying? 😰
Is every loan default settled through long court cases? What if we told you there’s a faster, smarter way?
In this power-packed session of “Resolution of Stressed Assets – Part 3”, we dive deep into practical recovery tools like SARFAESI Act, Lok Adalat, and DRT/DRAT, and decode how banks handle loan defaults swiftly—without going to court in many cases!
You’ll discover:
- How final decrees are executed ✅
- When Lok Adalat can solve disputes under ₹20 lakhs 🧑⚖️
- SARFAESI powers banks use to take over and sell property 🏠
- DRT vs Civil Court: What’s faster & smarter for recovery 💡
Whether you’re a banking aspirant, a banker preparing for CCP, or just curious about how the system works—this video is your shortcut to clarity.
👉 So grab a notebook, hit play, and don’t forget to comment your doubts—we reply to everyone! 👇
👉 Before we dive in, watch this video for a complete breakdown:
🚀 Execution of Final Decree: What Happens After Court Judgment?
When a court passes a preliminary decree in a loan default case, a final decree must be filed within the limitation period. Banks must also file for execution within 12 years.
Execution options include:
- Taking possession of mortgaged property
- Selling asset through auction
- Arrest of the defaulter (in fraud cases)
- Appointment of a receiver
📢 Property Auction: Recovery in Action
Here’s how banks recover money through auctions:
- Public notice is issued
- Borrower gets a chance to repay
- Property is auctioned
💸 Recovery of Balance Amount After Sale
If auction doesn’t cover full dues, banks can:
- Sell other properties
- Attach movable assets or salary
- Request borrower’s arrest
🏢 Liquidation & Insolvency: Borrower is a Company?
Section 325 of Companies Act applies. Courts must approve sale/attachment of assets during liquidation.
⚖️ Lok Adalat: Speedy Justice for Small Loans
- For loans < ₹20L
- No fees, fast settlement
- No appeal as it’s consent-based
🏛️ Debt Recovery Tribunal (DRT): Fast Track for ₹20L+ Loans
- Handles ₹20L+ recovery cases
- Faster than Civil Court
- Appeal to DRAT within 45 days with 50% deposit
📜 SARFAESI Act 2002: Court-Free Recovery Tool
Allows banks to enforce security interest directly. Applicable if:
- Account is NPA (90+ days overdue)
- Outstanding ≥ ₹1L & 20% of loan
- Charge is registered with CERSAI
[FREE PDF] Resolution of Stressed Assets | Chapter 26 | Module E | IIBF CCP
🔁 Sale to ARC / Securitization Companies
Banks can sell NPAs to ARCs which recover via:
- Management takeover
- Business sale
- Debt restructuring
- Security receipt issuance
🧾 Write-Offs: When Recovery Seems Impossible
- Technical Write-Off: Adjusted with provisions, recovery efforts continue
- Actual Write-Off: Loan removed from books
📊 Summary Table: Comparing Recovery Tools
| Recovery Method | Use Case | Legal Intervention | Threshold |
|---|---|---|---|
| Lok Adalat | Loans < ₹20L | No | Up to ₹20L |
| DRT / DRAT | Loans ≥ ₹20L | Yes | ₹20L+ |
| SARFAESI | Secured NPA recovery | No court needed | ≥ ₹1L & 20% |
| ARC/SC | NPA Sale | No | NPA required |
📥 Download the PDF Notes
👉 Click Here to Download CCP Chapter PDF Notes – Resolution of Stressed Assets – Part 3
Conclusion:
You now know how banks use SARFAESI, DRT, and Lok Adalat to recover loans without lengthy court delays. 💼
✅ Take notes, revise using the PDF, and comment below your doubts—we’re here to help you succeed.
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Let’s ace CCP together! 🚀
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