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What is Possession?

On default of installments for about six months, the lender seeks to foreclose the loan and the first step is issue of a demand notice to the borrower calling upon the borrower to pay the amount specified in the notice by the date mentioned therein and clearly mentioning that upon failure to pay the same the financial institution would go ahead in taking possession of the property. After expiry of the notice period (normally two months) if the amount mentioned in the demand notice is not paid by the borrower the authorized officer shall proceed to take possession of the property. The possession is of two types. One is physical possession and the other is symbolic possession. In the former, the property is physically taken over by the financial Institution and in the latter, the borrower continues to have physical possession but the lender proceeds towards disposal of the property. The authorized officer in the presence of two witnesses conducts a Panchnama and takes possession of such property. The authorized officer shall keep the property taken possession either in his own custody or in the custody of any person authorized or appointed by him, who shall take as much care of the property in his custody as an owner of ordinary prudence would, under the similar circumstances, take of such property. The authorized officer shall take steps for preservation and protection of secured assets and insure them, if necessary, till they are sold or otherwise disposed off.