How to Respond to a SARFAESI Notice Under Section 13(2)

Introduction

When a SARFAESI notice under Section 13(2) lands at your door, the first reaction is usually anxiety. Sometimes panic. For business owners and individual borrowers alike, it often feels like the bank has already made up its mind.

That assumption is wrong.

This notice is serious, no doubt. But it is not the final word. In fact, it is one of the most important stages in the entire SARFAESI process. What you do—or don’t do—after receiving it can significantly affect what happens next.

Over the years, many borrowers have lost valuable time by ignoring the notice, responding casually, or trusting verbal conversations with bank officials. Unfortunately, SARFAESI law doesn’t work on assurances. It works on records, timelines, and written responses.

What Is a SARFAESI Notice Under Section 13(2)?

The SARFAESI Act was introduced to help banks recover money without going through long civil court cases. Once a loan account is declared a Non-Performing Asset (NPA), the bank gets the power to issue a demand notice under Section 13(2).

This notice tells the borrower to clear the outstanding dues within 60 days. At the same time, the law allows the borrower to raise objections if something isn’t right. That could be the amount claimed, the way interest has been calculated, or even whether the account was correctly classified as an NPA in the first place.

Courts have repeatedly said that this stage cannot be treated as a mere formality. It exists so that borrowers get a fair chance before harsher recovery steps begin.

Why You Should Not Ignore a Section 13(2) Notice

Ignoring a SARFAESI notice almost always makes things worse. Once the 60-day period ends without a proper reply, the bank can move forward under Section 13(4).

That usually means possession notices, asset seizure, and eventually auction proceedings. At that point, borrowers often rush to lawyers asking what can be done. By then, the room for manoeuvre is already limited.

Courts generally expect borrowers to speak up early. Silence is rarely forgiven in SARFAESI matters.

Time Limits and Legal Deadlines You Must Know

The 60-day period is fixed by law. It starts from the date you receive the notice, not from the date you decide to read it seriously.

Banks are under no obligation to grant extensions, and in most cases, they don’t. Waiting until the last few days usually results in hurried replies that miss key legal points. From a practical standpoint, early responses carry more credibility and leave room for follow-up discussions.

Key Details You Should Verify in the Notice

Before responding, the notice needs to be read carefully—line by line. Many SARFAESI proceedings collapse later because of errors made at this stage.

You should always check:

• Whether the loan amount mentioned is accurate
• Whether interest and penalties have been calculated correctly
• Whether the NPA classification follows RBI guidelines
• Whether the secured asset details are complete and correct

What may look like a minor error today can become a strong legal point later—if it is raised properly.

How to Draft a Proper Reply to a SARFAESI Notice 13(2)

A reply to a SARFAESI notice is not just a letter. Legally, it is a representation under Section 13(3A). That distinction matters.

A good reply is clear, factual, and calm. It explains where the bank may be wrong, points out procedural lapses if any, and refers to documents where needed. Emotional language or aggressive threats usually weaken the case rather than strengthen it.

Courts have made it clear that banks must consider borrower objections seriously. But that only helps if the objections themselves are properly drafted.

Possible Legal and Strategic Options After Receiving the Notice

Not every SARFAESI reply has to be confrontational. In many situations, it opens the door for negotiation. Depending on the facts, borrowers may consider:

• Settlement or one-time payment discussions
• Requests for revised repayment schedules
• Objections based on RBI circulars or court decisions
• Preparing for DRT proceedings if enforcement begins

The right approach depends on your financial position, documentation, and long-term objectives.

Role of a Legal Professional in Responding to SARFAESI Notices

While borrowers are allowed to reply on their own, experience shows that professional drafting often changes outcomes.

Advocates know which objections banks are required to address, what procedural lapses courts actually care about, and how SARFAESI timelines are interpreted in practice. Many borrowers have obtained relief simply because their replies were timely and legally precise.

Platforms like LegalParihar are particularly helpful here. LegalParihar allows borrowers to get SARFAESI replies drafted online by experienced advocates. It saves time, avoids confusion, and ensures that the response is legally sound.

What Happens After You Submit Your Response

Once the reply is submitted, the bank must examine it and issue a reasoned response.

If the objections are accepted, the bank may pause or correct its action. If they are rejected, the bank may proceed further under Section 13(4). Even then, the borrower’s reply becomes a crucial document if the matter goes before the DRT.

Courts increasingly scrutinise whether banks have genuinely applied their mind to borrower representations.

Common Mistakes Borrowers Make — and How to Avoid Them

• Treating the notice as a routine recovery letter
• Sending rushed or poorly drafted replies
• Relying only on phone calls or meetings
• Seeking legal advice only after possession is taken

Most of these issues can be avoided with early, informed action.

Conclusion

A SARFAESI notice under Section 13(2) is a warning sign, not a dead end. Borrowers who respond on time, understand the process, and take the right guidance often manage to protect their assets and negotiate better outcomes.

If you’ve received such a notice, don’t delay. Services like LegalParihar make it easier to respond correctly by connecting you with experienced advocates who understand how SARFAESI law works in real life—not just on paper.

When property or business assets are involved, timely action really does matter.

Frequently Asked Questions (FAQs)