What is Demand Notice?
A Demand Notice under Section 13(2) of the SARFAESI Act is a written notice from a secured creditor to a borrower in default, demanding payment of the full dues within 60 days. If unpaid, the bank can take possession of the secured asset under Section 13(4).
| Meaning | A Demand Notice under Section 13(2) of the SARFAESI Act is a written notice from a secured creditor to a borrower in default, demanding payment of the full dues within 60 days. If unpaid, the bank can take possession of the secured asset under Section 13(4). |
|---|---|
| Category | SARFAESI |
| Related Laws | SARFAESI Act 2002, Section 13(2) |
| Who Uses It | Borrowers, guarantors, secured creditors |
| Why It Matters | Starts the 60-day statutory clock before enforcement. |
Demand Notice explained in plain English
A practitioner's view written for borrowers and advisors — not a textbook definition.
A Demand Notice under Section 13(2) of the SARFAESI Act is a written notice from a secured creditor to a borrower in default, demanding payment of the full dues within 60 days. If unpaid, the bank can take possession of the secured asset under Section 13(4).
In practice, Demand Notice is used most often by borrowers, guarantors, secured creditors. Each of them sees the term from a slightly different angle: borrowers care about protection and outcomes, lenders care about classification and recovery, regulators care about consistency and disclosure.
The legal anchor for Demand Notice is SARFAESI Act 2002, Section 13(2). RBI master directions, the SARFAESI Act 2002, the RDB Act 1993 and the IBC 2016 commonly interplay, depending on the loan size, security and stage of stress.
Why does it matter? Starts the 60-day statutory clock before enforcement. For a stressed borrower, getting this concept right early often saves several months of penal interest, legal cost and credit-score damage.
A real example: Bank issues a 13(2) notice demanding ₹1.2 crore within 60 days. The mechanics may look complex, but the underlying logic — the bank wants closure, the borrower wants a fair outcome — is straightforward once the right framework is in place.
If you are facing a situation involving Demand Notice, the safest first step is a structured case review with a senior ex-banker who has handled comparable matters across banks and ARCs in India.
Where you'll encounter Demand Notice
Whenever a loan moves from "Standard" to "stressed", Demand Notice is one of the words that starts appearing in notices, bank emails and lawyers' opinions.
Sanctioning committees, recovery teams and risk officers use Demand Notice to classify accounts, decide provisioning and approve resolution paths.
Demand Notice appears in pleadings, securitisation applications, OAs, Section 7/9 petitions and SARFAESI writs as part of the dispute record.
When stressed loans are sold to ARCs or special-situations investors, Demand Notice is used in term sheets, assignment agreements and due-diligence reports.