Banks auction properties, including residential, commercial, and industrial assets, when borrowers default on loans. This is done under legal frameworks such as the SARFAESI Act to recover dues. Here’s a breakdown of how bank auctions work: 

Key Steps in a Bank Property Auction

1. Auction Notice

   • Banks publish auction notices in newspapers or online, providing key details such as property location, reserve price, auction date, and earnest money deposit (EMD) amount.

   • These notices can be found on bank websites or property auction platforms.

2. Inspection and Due Diligence

   • Potential buyers should inspect the property and check for any legal issues, encumbrances, or pending dues like property tax and utility bills.

   • It’s crucial to verify the property’s legal status and title documents before bidding.

3. Registering for the Auction

   • Interested bidders must register with the bank’s auction platform or in person.

   • A refundable EMD (usually 10% of the reserve price) must be deposited as a security measure to participate in the auction.

4. Bidding Process

   • Auctions are held online or offline. In online auctions, bidders can log into the bank’s platform on the specified date.

   • Bidders start from the reserve price and increase their bids in predefined increments.

   • The highest bidder wins the auction.

5. Payment and Documentation

   • The winning bidder is required to pay the balance amount within a specified period (usually 15-30 days).

   • Once the payment is complete, the bank issues a sale certificate.

   • The property transfer is completed after the sale certificate is registered with the sub-registrar.

6. Handover and Possession

   • The bank hands over the property to the buyer, but if there are occupants or legal disputes, the buyer may need to take legal steps to obtain physical possession.

Benefits of Buying Properties at Bank Auctions

• Lower Prices: Properties are often auctioned at prices below market value.

• Transparency: The auction process is regulated, ensuring transparency and fairness.

Risks Involved

• Legal Disputes: Some properties may have unresolved legal issues or occupants who refuse to vacate.

• Pending Dues: Buyers may inherit unpaid dues like taxes or utility bills, which need to be settled.