The action for actual repossession of vehicles is to be initiated only after dishonour of the second cheque in cases of post dated cheque (PDC) or after the borrower has defaulted in repayment of two instalments and the period of demand notice has expired. In respect of Tractor Loans, the period of default would be two instalments subject to maximum of one year. Procedure For Issue Of Notice To The Borrower: 1.The demand notices are to be served on the borrowers for payment of instalments & dues and also whenever PDC cheques presented have been dishonored.

2. Whenever a cheque is dishonoured or an instalment remains unpaid for the first time it should be immediately brought to the notice of the borrower by issuance of a notice at the address provided by the borrower. This should be effected by delivering or transmitting to the borrower/ guarantor or his agents by registered post with acknowledgment due or by speed post or by courier or by any other means of transmission of documents like fax message or electronic mail service. Proof of dispatch at the given address would be considered as sufficient proof of service of notice.In such cases seven days time, reckoned from the date of service of the notice, should be given for clearance of the due amount.

3.In case of second dishonour of cheque, or subsequent instalment remaining unpaid, similar notice should be served, drawing attention of the borrower to the terms of the Agreement entitling the lender to recall the entire loan. This notice should again give seven days time to the borrower to pay the overdue amount. The seven days time should be reckoned from the date of service of the notice.

4. If the authorized officer has reasons to believe that the borrower or his agent is avoiding the service of notice or for any other reason the notice cannot be served, a copy of the demand notice may be affixed on the outer door or some other conspicuous part of the house or building in which the borrower or his agent resides or carries on business.

5.In case of guarantors, demand notices may be served only in cases where the guarantor has provided securities to the Bank. In other cases a copy of the notice may be sent to the guarantor for information.

6.If the borrower/guarantor fails to meet their two repayment obligations in full within the stipulated time, it would be open to the Bank to exercise its power under the Loan Agreement to recall the loan.

III. Actual Repossession Of Vehicle :

1.Action for actual repossession should be initiated by sanctioning branch or office or where the loan is parked. They should initiate steps to identify hypothecated asset as per the record and hand over the details of the asset to Recovery Agents (RAs) for execution.

2.Before assigning the default case to Recovery Agent it shall be ensured that proper scrutiny and screening of the defaulted case is carried out by screening committee so that the customers are not unduly harassed on account of lapses on the part of the bank in wrongful classification of the account asdefault case. (*In line with the Banking codes & Standards Board of India letter dated 20.09.07.

3.Before initiating process of actual repossession of the vehicle, a notice should be sent to the borrower, as per format enclosed as Annexure’B’ to handover the vehicle along with its original Registration Book as well as papers relating to insurance Policy (if not with the branch) to the Recovery Agency. Such a notice should invariably mention number and date of notices sent to him to regularize the account.

4.If the notice to hand over the vehicle by the borrower is not complied with by the borrower, the process for the repossession of the vehicle through Recovery Agents will be initiated.

5.Execution by Recovery Agents:The execution of actual repossession/ impounding of the vehicle will be carried out by one of the approved Recovery Agents (RAs) acting on Bank's behalf. The RAs will be mandated to enter the places where the hypothecated vehicle is garaged on instruction of the Bank at all times. The execution of actual repossession/impounding of vehicles will be carried out by the RAs and therefore the presence of Bank officials at the time of repossession of vehicles is not required.

6.Panchnama: After taking possession of the vehicle, in the presence of two witnesses, a Panchnama should be drawn up as per format enclosed at Annexure’C’. Proper inventory of the vehicle and its accessories as per format enclosed at Annexure ‘D’ should also be made at the time of the seizure by RA.

7.Immediately after seizure of vehicle a notice is required to be sent to the borrower to pay up along with the costs of seizure and storage of the vehicle by the branch as per format enclosed at Annexure’E

8.Although on taking possession of the vehicle, the Bank does not automatically become its pledgee; it has now become a banking practice to sell the hypothecated vehicle through public auction subject to retention of a minimum price as per the observation of honourable Supreme Court.

9.In no case RAs should resort to unfair means for taking possession of the vehicle.

IV.Custody:

1.The repossessed vehicle should be kept in, the custody of the RAs. It has been decided to use the services of third parties for storage of vehicles repossessed/impounded. However the agency for keeping the custody of the vehicles can be different than the RA who has impounded the vehicles, in case RA does not have arrangement for storage of vehicle.

2.The RA should take as much care of the vehicle as a man of ordinary prudence would, under similar circumstances, take of his own property and should take steps, for preservation and protection of the vehicle and insure the same, if necessary, till it is sold or otherwise disposed of.

3.At the branch a proper inventory and record will be maintained of the vehicles stored in the godown of RA / Agency.

V.  Valuation:

1.After taking possession of the vehicle, it is required to immediately arrange for its valuation and fix the base price for the auction.

2.An authorized service centre of the manufacturer of the vehicle should be used to do the valuation of the vehicle impounded.

3.If no such service centre or dealers are available, the valuation should be completed by a Government approved valuer or insurance surveyor.

VI.Sale:

1.Before affecting the sale of repossessed/impounded vehicle the borrower should be issued a notice of minimum seven days.

2.The valuation will be done both for market sale as also for distress sale of vehicles.

3.The Authorised Officer may sell the vehicle:
by obtaining quotations from parties dealing in the vehicle or
·Otherwise interested in buying the vehicle; or
·by inviting tenders from the public;
·or by holding public auction; or
·by private treaty.

4.In case of public auction, a notice should be published in two leading newspapers, one in vernacular language, having sufficient circulation in .the locality, by setting out the terms of sale including the following:
·Details about the borrower and the secured creditor.
·Description of vehicle to be sold with vehicle registration /chassis /engine numbers/year of manufacture.
· Reserve price, if any, the time frame and manner of payment.
·Time and place of intended public auction or the time after which sale by any other mode shall be completed.
·Depositing earnest money as may be stipulated by the Authorised Officer
·Any other thing which the Authorised Officer considers material for a purchaser to know in order to judge the nature and value of the vehicle.

5.In case of sale by obtaining quotations from interested parties, the extant laid down procedure for inviting quotations from at least 3 interested parties should be followed. The invitation should contain details prescribed for issue of public tender/auction notice, as considered applicable.

6.In case of sale by obtaining quotations from interested parties or by private treaty also, it would be preferable to have a Reserve Price fixed, below which the assets will not be sold, as in case of tender/auction. The endeavour should be to obtain a price above the Reserve Price through negotiations.

VII.Issue of certificate of sale :

Where vehicles are sold, the sale price of each should be paid as per the terms of the public notice or on the terms as may be settled between the parties.

1. In the event of any default by the purchaser, the assets shall be liable for sale again.

2. On receipt of sale price, the Authorised Officer shall issue a Certificate of Sale as per format given in Annexure’F’. Such certificate shall be the prima facie evidence of title of the purchaser.

3. The lien in the R.C. book will be cancelled by writing letter to R.T.O.

Sale of vehicle will be subject to payment of local taxes, stamp duty on the documents prepared for effecting sale including the Sale Certificate, etc., as per State Law. This may be reckoned while arriving at the reserve price/realizable value and these are to be immediately met by the purchaser after completion of sale.

Where the Bank's dues are not fully satisfied with the sale proceeds from the vehicle, bank may take the help of RA in recovery of loan loss amount and the Branch should file an application with a competent Court for recovery of balance amount from the borrower. The decision to file such an application should be based on the loan loss amount vis-a-vis cost of suit and chances of recovery by the appropriate authority.