Recovery of Retail Loans · One-liners

1 Bullet Payment — How it Works / Where Used?

How it Works: The entire principal + accumulated interest is repaid at the end of the period (one shot). Computed using compound interest — Final Amount = P × (1 + r)^n; Where Used: Short-tenor business loans, agri (crop) loans, bridge loans

2 Fixed Installment of Loan — How it Works / Where Used?

How it Works: Principal is divided into equal monthly installments; the borrower additionally pays all interest accrued for that month; Where Used: DPN-style demand loans, project loans with moratorium-plus-amortisation, Govt. dues

3 Equated Monthly Installment (EMI) — How it Works / Where Used?

How it Works: Borrower pays the same fixed amount every month — each EMI bundles principal + interest. Early EMIs are interest-heavy; later EMIs are principal-heavy; Where Used: Housing, auto, personal, education, gold, consumer durable loans — the dominant retail repayment mode

4 What is ₹40,00,000?

is sanctioned at **9% p.

5 Genuine Default — Definition / Examples?

Definition: Default occurs due to reasons beyond the borrower's control; Examples: Job loss, medical emergency, salary delay; business setback from new competition, sudden regulatory change, fire/flood

6 Wilful Default — Definition / Examples?

Definition: RBI defines wilful defaulting as deliberate non-payment of dues by a borrower despite adequate cash flow and good net worth; Examples: Asset bought with bank's money sold off without bank's knowledge; loan amount siphoned for non-sanctioned purposes; borrower simply won't pay though can…

7 Diversion of Funds?

Utilisation of funds for a purpose for which the loan was not sanctioned — e.g., short-term WC used for long-term assets; deploying borrowed funds for activities other than those sanctioned; transferring funds to subsidiaries/group companies; routing funds through any bank other than the lender…

8 Siphoning of Funds?

Funds borrowed from banks are utilised for purposes unrelated to the operations of the borrower, to the detriment of the financial health of the entity or of the lender

9 Genuine defaulters handled sensitively?

through re-phasing, EMI moratorium, rate concession, top-up, One-Time Settlement (OTS) under board-approved compromise policy.

10 Wilful defaulters handled strictly and professionally?

recovery action front-loaded; SARFAESI invoked; criminal complaint, guarantor pursuit, public-name publication after 6 months on the wilful-defaulter list.

11 SMA-0?

1 – 30 days

12 SMA-1?

31 – 60 days

13 SMA-2?

61 – 90 days

14 STANDARD?

Accounts which are in order (no overdue beyond 90 days); not an NPA

15 SUB-STANDARD (SS)?

Accounts which have been classified as NPAs for a period not exceeding 12 months

16 DOUBTFUL (D1 / D2 / D3)?

Accounts which have remained NPA for a period exceeding 12 months — further split into D1 (next 12 months), D2 (next 24 months), D3 (beyond 36 months)

17 LOSS?

Accounts where the loss has been identified by the bank / auditor / RBI inspection, but the amount has not been written off wholly

18 STANDARD — Direct Agri & SME — Sub-bucket / Provision %?

Provision %: 0.25%

19 STANDARD — All other loans & advances — Sub-bucket / Provision %?

Provision %: 0.40%

20 STANDARD — Commercial Real Estate (CRE) — Sub-bucket / Provision %?

Provision %: 1.00%

21 STANDARD — Teaser-rate Housing Loan — Sub-bucket / Provision %?

Provision %: 2.00%

22 STANDARD — CRE-Residential Housing (CRE-RH) — Sub-bucket / Provision %?

Provision %: 0.75%

23 SUB-STANDARD — Secured — Sub-bucket / Provision %?

Provision %: 15% of outstanding

24 SUB-STANDARD — Unsecured (value of security ≤ 10%) — Sub-bucket / Provision %?

Provision %: 25% (20% for infrastructure loans)

25 DOUBTFUL — D1 (first 12 months as Doubtful) — Sub-bucket / Provision %?

Sub-bucket: RVS; Provision %: 25%

26 DOUBTFUL — D1 — Sub-bucket / Provision %?

Sub-bucket: Shortfall in security; Provision %: 100%

27 DOUBTFUL — D2 (next 24 months) — Sub-bucket / Provision %?

Sub-bucket: RVS; Provision %: 40%

28 DOUBTFUL — D2 — Sub-bucket / Provision %?

Sub-bucket: Shortfall in security; Provision %: 100%

29 DOUBTFUL — D3 (beyond 36 months) — Sub-bucket / Provision %?

Sub-bucket: Both RVS & shortfall; Provision %: 100% uniformly

30 LOSS — Sub-bucket / Provision %?

Provision %: 100% — entire asset to be written off

31 State Govt. guaranteed advances?

IRAC norms applicable (even if the State has not yet refused payment).

32 Central Govt. guaranteed advances?

treated as NPA only when the Central Govt. repudiates its guarantee.

33 Repayment Schedule?

Fixed considering paying capacity and cash-flow pattern of the borrower

34 Security Repossession?

Aims at recovery in event of default — not whimsical deprivation of property

35 Customer Contact?

Ordinarily at the place of the customer's choice; if not specified residence; if unavailable place of business/occupation. No calls before 7 a.m. or after 7 p.m.

36 Identity & Authority of Recovery Personnel?

Disclosed to the borrower at the first instance — name, ID card, authorisation letter

37 Notice Before Action?

Bank will not initiate any legal or recovery measure (including repossession) without due written notice

38 Valuation & Sale?

Repossession valuation realisation, in a fair and transparent manner. Excess proceeds returned to borrower; shortfall recoverable under bank's lien & set-off right

39 Agricultural land?

cannot be sold under SARFAESI.

40 Demand Notice — Time / Section / What Happens?

Time / Section: Sec. 13(2) — 60 days; What Happens: Bank serves a written demand on the borrower to discharge the dues within 60 days

41 Borrower Objection — Time / Section / What Happens?

Time / Section: 15 days; What Happens: If borrower objects to the notice, the bank must reply within 15 days

42 Possession — Time / Section / What Happens?

Time / Section: Sec. 13(4); What Happens: After expiry of 60 days (and disposal of objection), bank may take possession of the secured asset

43 Magistrate's Help — Time / Section / What Happens?

Time / Section: Sec. 14 — 30 days (+30 extension); What Happens: If borrower obstructs, bank may approach the Chief Metropolitan Magistrate (CMM) or District Magistrate (DM), who shall pass orders within 30 days — extendable by another 30 days for recorded reasons

44 DRT Appeal by Borrower — Time / Section / What Happens?

Time / Section: Sec. 17 — within 45 days; What Happens: Aggrieved borrower may file an application before DRT within 45 days; DRT must dispose within 60 days; if not, max 4 months

45 DRAT Appeal — Time / Section / What Happens?

Time / Section: Sec. 18 — within 30 days; What Happens: Appeal lies to DRAT within 30 days. Borrower must deposit 50% of the debt due — reducible to not less than 25% at DRAT Chairperson's discretion

46 Sale of Asset — Time / Section / What Happens?

Time / Section: Sec. 25-29; What Happens: Sale through public auction or private treaty after newspaper publication and 30-day sale notice

47 Newspaper publication?

in 2 newspapers (one regional language, one national language) — TWICE

48 Notice before possession (Sec. 13(2))?

60 days

49 Bank's reply to borrower objection?

15 days

50 Borrower's application to DRT (Sec. 17)?

45 days

51 Appeal to DRAT against DRT decision (Sec. 18)?

30 days

52 Notice before sale (Sec. 13(4))?

30 days

53 Period for balance payment (75%) by buyer of asset?

15 days

54 Application?

Made to the Tribunal having territorial jurisdiction (where defendant resides or cause of action arose) — in person, by agent, by legal practitioner, or by registered post to the Registrar of DRT

55 Prescribed Format?

4 copies in book form — index, plaint, documents and affidavit attested by notary public signed by bank officials

56 Appeal Against Registrar's Order?

Within 15 days to the Presiding Officer, whose decision is final

57 Language?

English or Hindi — any other language must be accompanied by translation in English/Hindi

58 Joining of Other Banks?

Another bank/FI with a claim against the same borrower may join the proceeding at any stage before the final order, by application to the Tribunal

59 Issue of Summons?

DRT issues summons within 30 days of accepting the application; defendants must show cause within 30 days of service

60 Disposal?

Expected within 2 hearings

61 Interim Order?

DRT may restrain defendants from disposing of any property without prior permission

62 Recovery Certificate?

After decree, bank applies for Recovery Certificate — filed before the Recovery Officer (RO) of the DRT

63 Regular Lok Adalat?

Up to ₹20 lakh

64 Lok Adalat formed under DRT (for cases > ₹20 lakh)?

Above ₹20 lakh (no upper cap under DRT-Lok Adalat)

65 Permanent Lok Adalat (PLA) — civil?

Up to ₹1 crore

66 Permanent Lok Adalat (PLA) — criminal?

Compoundable offences only

67 No court fee?

and if a case is pre-existing in a court, the court fee paid is refunded if settled in Lok Adalat.

68 Public Sector Banks (PSBs)?

handle retail-loan recovery internally, using their own staff and recovery cells.

69 Private and foreign banks?

typically outsource recovery to third-party Recovery Agents once accounts go delinquent.

70 Due Diligence?

Banks must establish a due-diligence process for engaging recovery agents

71 Informing Borrowers?

When forwarding a default case to the agency, banks must inform the borrower of the agency's name and authorisation

72 Contact Information?

Notice and authorisation letter must include telephone numbers of the agency and bank's nodal officer

73 Tape Recording?

Banks must ensure tape recording of communication between recovery agents and customers

74 Grievance Handling?

Banks must NOT forward cases to recovery agencies if a grievance / complaint has been lodged by the borrower against that bank in relation to the loan — unless the grievance is disposed of

75 Grievance Mechanism?

Borrowers must be informed of the mechanism + agency details

76 Training & Examination?

Agents must undergo training — 50 hours for graduates and 100 hours for non-graduates — and pass the DRA (Debt Recovery Agents) Examination conducted by IIBF with a minimum 50% mark

77 Incentives?

Contracts must not induce uncivilised, unlawful, or questionable behaviour

78 Liability?

Banks, as principals, are liable for acts of their agents — RBI may impose a ban on a bank from engaging recovery agents in a particular area (jurisdictional or functional) for a limited period for serious violations

79 Statute — Lok Adalat / DRT / SARFAESI?

Lok Adalat: Legal Services Authority Act, 1987; DRT: Recovery of Debts Act, 1993; SARFAESI: SARFAESI Act, 2002

80 Money Threshold — Lok Adalat / DRT / SARFAESI?

Lok Adalat: ≤ ₹20 lakh (Permanent LA: ≤ ₹1 cr); DRT: ≥ ₹20 lakh; SARFAESI: ≥ ₹1 lakh (asset/loan value)

81 Court Fee — Lok Adalat / DRT / SARFAESI?

Lok Adalat: NIL; DRT: ₹12,000 + ₹1,000/lakh (max ₹1,50,000); SARFAESI: NIL (extra-judicial)

82 Secured / Unsecured — Lok Adalat / DRT / SARFAESI?

Lok Adalat: Both; DRT: Both; SARFAESI: Secured only

83 Time to Disposal — Lok Adalat / DRT / SARFAESI?

Lok Adalat: Same day / very fast; DRT: 2 hearings expected; SARFAESI: 60 days notice + 30 days possession

84 Appeal — Lok Adalat / DRT / SARFAESI?

Lok Adalat: NO appeal; DRT: DRAT (within 30 days); SARFAESI: DRT under Sec. 17

85 Best Suited For — Lok Adalat / DRT / SARFAESI?

Lok Adalat: Small retail dues, friendly OTS; DRT: Mid-large corporate / unsecured retail; SARFAESI: Mortgage / hypothecation loans of any size

86 Borrower-wise classification?

once any one facility turns NPA, all facilities of that borrower are NPA.

87 (True/False) The EMI of a loan increases as the tenure increases, with all other variables held constant?

FALSE — Longer tenure reduces the EMI (interest spread over more periods); it raises total interest paid.

88 (True/False) An account overdue by 45 days is classified as SMA-1?

TRUE — SMA-1 = 31-60 days overdue.

89 (True/False) The SARFAESI Act, 2002 applies only to secured loans where the security interest is enforceable by the bank?

TRUE — Unsecured loans, pledged-deposit loans and lien-backed loans are outside SARFAESI.

90 (True/False) Under SARFAESI, a borrower may approach the DRT under Sec. 18 against a possession notice within 45 days?

FALSE — Borrower approaches DRT under Sec. 17 (not Sec. 18) within 45 days. Sec. 18 is the appeal from DRT to DRAT (within 30 days).

91 (True/False) The maximum monetary jurisdiction of a regular Lok Adalat is ₹20 lakh, while a Permanent Lok Adalat can hear civil matters up to ₹1 crore?

TRUE — Two distinct forums; the Permanent Lok Adalat has the wider ceiling.

92 (True/False) Provisioning on a Sub-Standard secured account is 25% of the outstanding?

FALSE — It is 15% on secured; 25% is the unsecured Sub-Standard rate (20% for infrastructure).

93 (True/False) An NPA can be classified directly as Loss Asset if the realisable value of security is below 10% of the outstanding?

TRUE — Direct Loss classification on RVS < 10%; direct Doubtful on RVS < 50%.

94 (True/False) Wilful default is defined as default by a borrower with adequate cash flow and net worth who deliberately does not pay?

TRUE — RBI's definition (now MD 30 Jul 2024).

95 (True/False) The DRA examination is conducted by RBI and requires a minimum 40% passing mark?

FALSE — It is conducted by IIBF (Indian Institute of Banking & Finance); passing mark is 50%.

96 (True/False) Diversion of funds means utilising bank funds for purposes unrelated to the borrower's business, while siphoning means utilising bank funds for purposes other than those sanctioned but…?

FALSE — The labels are swapped. Diversion = wrong purpose within or outside sanctioned scope; siphoning = funds leave the business altogether to the detriment of lender/entity.

97 (True/False) A DRT decree is appealable to DRAT within 30 days with a deposit of 50% of the decreed amount, which the DRAT Chairperson may reduce to not less than 25%?

TRUE — Exact text of the proviso.

98 (True/False) Under the Negotiable Instruments Act, 1881, the maximum imprisonment for dishonour of a cheque under Sec. 138 is 3 years?

FALSE — Maximum imprisonment is 2 years, or fine up to twice the cheque amount, or both.

99 (True/False) Provisions of IBC 2016 — Part III for Personal Guarantors to Corporate Debtors were notified w.e.f. 1 December 2019?

TRUE — Upheld by the Supreme Court in Lalit Kumar Jain (May 2021).

100 (True/False) The Banking Laws (Amendment) Act, 2025 allows a depositor to nominate up to 4 nominees for a deposit account?

TRUE — Simultaneous (with percentage shares) for deposits; successive for lockers.

101 SMA-0 / SMA-1 / SMA-2 — Statute / Section / Time / Threshold?

Statute / Section: RBI 2014 framework; Time / Threshold: 1-30 / 31-60 / 61-90 days

102 NPA classification — Statute / Section / Time / Threshold?

Statute / Section: IRACP norms; Time / Threshold: > 90 days overdue

103 Sub-Standard NPA — Statute / Section / Time / Threshold?

Statute / Section: IRACP; Time / Threshold: 0 – 12 months

104 Doubtful — D1 / D2 / D3 — Statute / Section / Time / Threshold?

Statute / Section: IRACP; Time / Threshold: 0-12 / 12-24-36 / > 36 months

105 Loss Asset — Statute / Section / Time / Threshold?

Statute / Section: IRACP; Time / Threshold: RVS < 10% of dues

106 NPA direct from Standard — Statute / Section / Time / Threshold?

Statute / Section: IRACP — security erosion; Time / Threshold: RVS < 50% Doubtful; RVS < 10% Loss

107 SARFAESI minimum outstanding — Statute / Section / Time / Threshold?

Statute / Section: RBI Notification 12 Mar 2008; Time / Threshold: ₹1 lakh (individuals)

108 Sec. 13(2) Demand Notice — Statute / Section / Time / Threshold?

Statute / Section: SARFAESI; Time / Threshold: 60 days

109 Bank's reply to objection — Statute / Section / Time / Threshold?

Statute / Section: SARFAESI; Time / Threshold: 15 days

110 Sec. 13(4) Possession — Statute / Section / Time / Threshold?

Statute / Section: SARFAESI; Time / Threshold: After 60-day notice expiry

111 Sec. 14 Magistrate's order — Statute / Section / Time / Threshold?

Statute / Section: SARFAESI; Time / Threshold: 30 days + 30 days extension

112 Sec. 17 Borrower's appeal to DRT — Statute / Section / Time / Threshold?

Statute / Section: SARFAESI; Time / Threshold: 45 days

113 DRT disposal of Sec. 17 application — Statute / Section / Time / Threshold?

Statute / Section: SARFAESI; Time / Threshold: 60 days (max 4 months)

114 Sec. 18 Appeal to DRAT — Statute / Section / Time / Threshold?

Statute / Section: SARFAESI; Time / Threshold: 30 days + 50% deposit (reducible to 25%)

115 Sale of asset — newspaper publication — Statute / Section / Time / Threshold?

Statute / Section: SARFAESI Sec. 13(8); Time / Threshold: 2 newspapers (regional + national), TWICE

116 Sale notice before auction — Statute / Section / Time / Threshold?

Statute / Section: SARFAESI; Time / Threshold: 30 days

117 Bidder's earnest deposit — Statute / Section / Time / Threshold?

Statute / Section: SARFAESI; Time / Threshold: 25% immediate; balance 75% within 15 days

118 Consortium SARFAESI threshold — Statute / Section / Time / Threshold?

Statute / Section: SARFAESI; Time / Threshold: 60% by value of secured creditors

119 DRT jurisdictional floor — Statute / Section / Time / Threshold?

Statute / Section: DRT Act 1993; Time / Threshold: ₹20 lakh

120 DRT application fee — Statute / Section / Time / Threshold?

Statute / Section: DRT Act 1993; Time / Threshold: ₹12,000 base + ₹1,000/lakh above ₹20 L, max ₹1,50,000

121 DRT summons — Statute / Section / Time / Threshold?

Statute / Section: DRT Act 1993; Time / Threshold: Within 30 days

122 DRT disposal target — Statute / Section / Time / Threshold?

Statute / Section: DRT Act 1993; Time / Threshold: 2 hearings

123 DRT detention — Statute / Section / Time / Threshold?

Statute / Section: DRT Act 1993; Time / Threshold: Civil prison up to 3 months

124 DRT DRAT appeal — Statute / Section / Time / Threshold?

Statute / Section: DRT Act 1993; Time / Threshold: 30 days

125 DRAT disposal target — Statute / Section / Time / Threshold?

Statute / Section: DRT Act 1993; Time / Threshold: 6 months

126 Presiding Officer term — Statute / Section / Time / Threshold?

Statute / Section: DRT Act 1993; Time / Threshold: 5 years

127 Lok Adalat ceiling — Statute / Section / Time / Threshold?

Statute / Section: LSA Act 1987; Time / Threshold: ₹20 lakh

128 DRT-Lok Adalat ceiling — Statute / Section / Time / Threshold?

Statute / Section: LSA Act 1987; Time / Threshold: > ₹20 lakh (no upper cap)

129 Permanent Lok Adalat — civil — Statute / Section / Time / Threshold?

Statute / Section: LSA Act 1987; Time / Threshold: ₹1 crore

130 Lok Adalat fee / appeal — Statute / Section / Time / Threshold?

Statute / Section: LSA Act 1987; Time / Threshold: NIL fee / NO appeal

131 Sec. 138 NI Act demand notice — Statute / Section / Time / Threshold?

Statute / Section: NI Act 1881; Time / Threshold: 30 days from dishonour

132 Sec. 138 borrower's payment window — Statute / Section / Time / Threshold?

Statute / Section: NI Act 1881; Time / Threshold: 15 days

133 Sec. 138 complaint window — Statute / Section / Time / Threshold?

Statute / Section: NI Act 1881 / BNSS 2023; Time / Threshold: 30 days after 15-day window

134 Sec. 138 max imprisonment — Statute / Section / Time / Threshold?

Statute / Section: NI Act 1881; Time / Threshold: 2 years or 2× cheque amount

135 IBC Part III — Personal Guarantor — Statute / Section / Time / Threshold?

Statute / Section: IBC 2016; Time / Threshold: 1 December 2019

136 Compromise Settlement cooling period — Statute / Section / Time / Threshold?

Statute / Section: RBI MD Jun 2023; Time / Threshold: 12 months (5 years for wilful/fraud)

137 DRA training — graduate / non-graduate — Statute / Section / Time / Threshold?

Statute / Section: RBI Code of Conduct; Time / Threshold: 50 hours / 100 hours

138 DRA exam — passing mark — Statute / Section / Time / Threshold?

Statute / Section: IIBF; Time / Threshold: 50%

139 Wilful Defaulter MD — Statute / Section / Time / Threshold?

Statute / Section: RBI MD; Time / Threshold: 30 July 2024

140 Compromise Settlement & Tech Write-off MD — Statute / Section / Time / Threshold?

Statute / Section: RBI MD; Time / Threshold: 8 June 2023

141 Internal Ombudsman applicability — Statute / Section / Time / Threshold?

Statute / Section: RBI MD 2023; Time / Threshold: SCBs with ≥ 10 branches

142 Standard Provision — Agri & SME / Other / CRE / CRE-RH / Teaser Housing — Statute / Section / Time / Threshold?

Statute / Section: IRACP; Time / Threshold: 0.25 / 0.40 / 1.00 / 0.75 / 2.00 %

143 Sub-Standard Provision — Secured / Unsecured — Statute / Section / Time / Threshold?

Statute / Section: IRACP; Time / Threshold: 15% / 25% (20% infra)

144 Doubtful Provision — D1 / D2 / D3 secured — Statute / Section / Time / Threshold?

Statute / Section: IRACP; Time / Threshold: 25% / 40% / 100%

145 Doubtful Unsecured / Loss — Statute / Section / Time / Threshold?

Statute / Section: IRACP; Time / Threshold: 100% uniformly

146 4-nominee rule — Statute / Section / Time / Threshold?

Statute / Section: Banking Laws (Amdt) Act 2025; Time / Threshold: Up to 4 nominees per deposit / locker

147 "30-60-90 SMA; 12-12-12 Doubtful."?

The two number-bundles that dominate this chapter.

148 "25-40-100"?

Doubtful provisions on the secured slice for D1-D2-D3.

149 "15-25-100"?

Sub-Standard secured / unsecured / Loss provisioning.

150 "0.25-0.40-1.00-0.75-2.00"?

Standard-asset provisions: Agri-SME / Others / CRE / CRE-RH / Teaser Housing.

151 "50/100/50%"?

DRA training: 50 h graduate / 100 h non-graduate / 50% pass mark.

152 "60-15-30 SARFAESI Sale"?

Possession notice in 60 days; reply in 15 days; sale notice in 30 days.

153 "25% on bid, 75% in 15 days"?

Successful auction bidder's payment schedule.

154 "50% then 25%"?

DRAT appeal deposit (full / reduced).

155 "Lok Adalat = No Fee, No Appeal."?

The two USPs of the people's court.

156 "Borrower-wise, not account-wise."?

One NPA = all NPAs of that borrower.

157 "RVS < 50% Doubtful direct; RVS < 10% Loss direct."?

IRACP security-erosion shortcut.

158 "Diversion = wrong purpose; Siphoning = leaves the business."?

Memorise the distinction, examiners love to swap.

159 "30 Jul 2024 + 8 Jun 2023 + 1 Dec 2019 + 12 Mar 2008"?

The four most-quoted dates of 2026 RBWM Ch. 14 (Wilful Defaulter MD / Compromise MD / IBC Part III for PGs / SARFAESI ₹1 L floor).

160 "4 nominees w.e.f. Banking Laws Amdt 2025"?

Recovery cells in death/insolvency must now log up to four nominees.

One-linersRecovery of Retail Loans