Frequently Asked Questions

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A bank auctions a property when a borrower defaults on loan payments. Typically, if a borrower fails to pay three consecutive home loan EMIs, the bank initiates the auction process. The bank issues a 60-day notice asking the borrower to explain why the property should not be auctioned due to non-payment. The borrower can either pay the outstanding amount and withdraw the notice or submit an objection within 60 days. If the borrower does not respond or if the bank is not satisfied with the response, the bank proceeds with the auction after 30 days from the expiry of the 60-day notice period. The process includes searching for auction properties, verifying property details, physically inspecting the property, submitting a bid, participating in the auction, making payments, obtaining a sale certificate, and registering it.

Yes, you can cancel your bid in a bank auction, but it depends on the stage of the auction process and the bank’s terms and conditions. If you have not submitted the bid form or EMD (Earnest Money Deposit), you can choose not to participate without any penalty. If you have submitted the bid form and EMD, then as per the bank’s terms, once a bid is placed, you cannot cancel it. In e-auctions, once you place a bid, you cannot withdraw it. However, if you place a bid but do not win, you will get a full refund of your EMD without any deductions.

The Reserve Price is the minimum price set by the bank for a property that is being auctioned. Bidders must place bids equal to or above this price for the auction to proceed. The reserve price is determined based on factors like the market value of the property, outstanding loan amount, property condition, and location.

If the bank has physical possession of the property, possession can be handed over quickly. However, if the bank has only symbolic possession, the legal process may take time to complete.

EMD (Earnest Money Deposit) is a refundable security deposit that a bidder must pay to participate in a bank auction. It is usually 5-10% of the reserve price of the property. If you win the auction, the EMD amount is adjusted against the total payment. If you do not win, the bank refunds the EMD without any deductions. However, if you fail to complete the payment after winning, the bank may forfeit your EMD.

  • A bank auction is held 30 days after the auction notice is issued. If the defaulter settles the outstanding amount with the bank during this period, the bank auction will be canceled.
  • If you are the successful bidder at a bank auction and fail to pay the remaining balance within the designated timeframe, the bank will confiscate your entire deposit.
  • Properties sold at auction by public sector banks tend to be less expensive than those auctioned by private banks.
  • Finally, it is advisable to refrain from aggressive bidding during the auction process. To manage this aspect, it is important to have a good understanding of the current market value of similar properties.

There are several types of auctions, including:
  1. E-Auction (Online Auction)
    • Conducted online through an authorized auction platform.
    • Bidders place their bids within a specified time frame.
    • Transparent and convenient for buyers.
  2. Open Auction (Public Auction)
    • Conducted at a physical location.
    • Bidders openly compete by placing higher bids.
    • The highest bidder wins the property.
  3. Sealed Bid Auction
    • Bidders submit their bids in sealed envelopes.
    • All bids are opened together, and the highest bid wins.
    • Ensures confidentiality of bid amounts.
  4. Private Treaty Sale
    • The bank negotiates directly with an interested buyer.
    • No competitive bidding; the property is sold at a fixed price.
  5. Dutch Auction
    • The auction starts at a high price, which gradually decreases.
    • The first bidder to accept the current price wins the auction.
In bank auctions, E-Auctions and Open Auctions are the most commonly used methods.