As part of banking banks lend money to the public and while lending money the banks also collect some sort of security be it movable or immovable properties, etc., and all these and other forms of securities become the Assets of the financing bank. These loans generate income by way of interest and this generation of income in short is the performance of the loan/asset.
If any borrower fails to re-pay the loan installments/fails to service the interest continuously over a period of time then that particular account and the asset relating to that account become NON PERFORMING ASSET.
The gross NPAs of all Public Sector Banks put together is Rs.68597 crores as on 31/12/2010 according toRBI.
Once an account is classified as NPA then the bank gives notice, takes possession and sells the property through auction process called Foreclosure and Asset recovery.
Earlier banks had to go through the legal process to realize their dues which was time consuming and they were also not sure as to when they will finally get their money back because of the procedure itself.
With a view to speed up the process the government has brought in an institution called The Debt recovery Tribunal through an Act of Parliament called the Recovery of Debts due to banks and other financial institutions Act 1993. But defaulters found loopholes in this also.
In order to plug in the existing loopholes Government of India in 2002 has brought in a new act called Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI). This led to an increase in number of Foreclosures in India which in turn has opened up a fresh market for the buyers known as “Bank foreclosure sales”.
The demand for properties under bank auctions is increasing.
We, ForeclosureIndia.com are the only website in India who is publicizing the possessed/under auction properties across India, which can be viewed throughout the world. We are helping the banks and other financial institutions in auctioning the NPAs more effectively. Several banks which have started utilizing our services are able to find more participants to their property auctions and are able to affect an increase in sales of properties possessed by them. Through our efforts, the market for bank auction properties is being expanded exponentially.