IOB will e-auction more than 500 properties spread across different cities.

More than 500 properties worth over Rs 800 crore located in Chennai, Coimbatore, Mumbai, Kolkata, Delhi, Bengaluru and Hyderabad will be sold through digital auction by the public sector bank India Overseas Bank (IOB).

On 21 October 2019 and 30 October 2019, the mega e-auction will take place. For the e-auction, the public sector bank has associated with Magicbrick. This includes seven regions including Chennai, Coimbatore, Mumbai, Kolkata, Delhi, Hyderabad and Bengaluru.

Out of more than 500 properties, the majority derives from Chennai and Coimbatore, with rest being spread over 12 major towns such as Mumbai, Pune, Nagpur, Kolkata, Ranchi, Meerut, Lucknow, Ludhiana, Hyderabad and Bhopal, according to a report from the web portal.

Property seekers need to register for the e-auction at auctions.magicbricks.com/bank/event  and to participate they need to deposit the earnest money into their nearest IOB branch. E-auction properties are “as in, wherein” basis.

“Online platforms have become the major driver for the real estate industry. Today, the buying process is being strongly impacted by digital engagement and trends in the e-auctioning of properties have increased in India, with growing internet penetration,” said K Swaminathan, Executive Director of the Indian Overseas Bank.

E-auction of property for the uninitiated will be arranged to recover the amount due from the borrower. If a borrower fails to pay the home loan, banks start the legal process of taking back the property which they sell at an e-auction.

If the borrower defaults on his loan for 6 consecutive months, he gets a 60-day notice period, after which if he still does not repay the banks give a further 30-day notice period. If even during this time, the borrower does not pay the loan, the bank declares it part of its non-performing asset (NPA). The properties then auctioned for restitution under the Sarfaesi Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002).

It is usually a sale of distress, given that the main goal behind the offer is to recover the partial amount of the property. The market price of the property in the area will always be higher than the value at which the bank had loaned the property.

Properties are valued before the auction by a professional valuer. As banks try to recover only the outstanding amount, the valuation is generally conservative.