EMI Tips: Missing your home loan EMIs? Find out how much time the bank gives you before auctioning your home..

If you fail to pay your home loan EMIs on time, it can lead to serious consequences. In extreme cases, the bank may even auction your home to recover the outstanding dues. However, this process is not that simple; before taking such action, the bank must adhere to a series of legal regulations and procedures.

In India, this entire process is governed by the SARFAESI Act and the regulations laid down by the Reserve Bank of India. If, during this period, the borrower repays the outstanding amount along with the accrued interest, the auction of the house can be halted.

Action May Begin After Three Missed EMIs

According to legal experts, if an individual fails to pay their home loan EMIs for 90 consecutive days, the bank may declare that the loan account is an NPA (Non-Performing Asset). Once declared an NPA, the bank issues a 60-day notice to the borrower, demanding the repayment of the entire outstanding amount. If the borrower raises an objection or submits a response to this notice, the bank is required to provide a reply within 15 days.

A Total Timeframe of Approximately 105 Days

According to experts, the bank must allow for a period of approximately 105 days before initiating the process of auctioning the house. This timeframe includes the 60-day notice period, 15 days for the borrower's response, and approximately 30 days for the issuance of the sale notice. If the property fails to sell during the initial attempt, an additional notice of 15 days may be issued.

What Actions Can the Bank Take Before the Auction?

If payment is not made even after the issuance of the notice, the bank possesses certain legal rights. Specifically, the bank may take physical possession of the mortgaged property. Subsequently, the property undergoes valuation and can then be sold through a tender, public auction, or e-auction.

No Court Approval Required
Under the SARFAESI Act, banks are not required to obtain permission from the court to effect such recoveries. However, the entire process is conducted strictly in accordance with established regulations.

Auction Can Be Averted Through Timely Payment

Experts state that if the borrower clears the outstanding dues promptly, the auction process can be halted. Therefore, in the event of a missed EMI, it is advisable to contact the bank as soon as possible and make payment arrangements.

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