Bank Declared Your Loan Account NPA Wrongly? How to Challenge It in Odisha

What Triggers NPA Classification?

An NPA (Non-Performing Asset) tag is applied to a loan account when the borrower fails to pay interest or principal for a specified period — typically 90 days overdue for term loans. Once this happens, the loan moves from being a routine account to one flagged for recovery action, which can eventually lead to a SARFAESI notice, credit score damage, and reporting to credit bureaus. Because the consequences are so serious, the accuracy of the classification matters enormously. Unfortunately, banks do get this wrong — and Odisha borrowers who assume the classification is final often lose valuable rights simply because they never raised an objection.

Common Wrongful Classification Scenarios

How to Formally Dispute the Classification

The moment you notice or receive intimation of an NPA classification you believe is incorrect, act quickly. First, obtain your complete loan account statement from the bank — this is your evidence base. Compare it line by line against your own payment records: bank transfer receipts, ECS confirmations, or cheque deposit slips. Once you identify the specific discrepancy, write a formal representation to the bank's branch manager or designated nodal grievance officer, clearly explaining the error, attaching supporting documents, and requesting correction of the classification along with a revised statement. This written record is critical — it becomes your evidence if the dispute later needs to go to the Banking Ombudsman or the DRT.

Escalation to the Banking Ombudsman

If the bank does not respond to your written representation within 30 days, or rejects it without proper justification, you have the right to escalate the matter to the RBI Banking Ombudsman covering Odisha. The Ombudsman scheme is designed specifically for grievances relating to loans and advances, including wrongful classification, incorrect charges, and unfair recovery practices. This process is free of cost and can be initiated online or by post. A well-drafted complaint, supported by your documentary evidence, significantly improves the chance of a favourable resolution.

When You Need a Lawyer

You should bring in a lawyer as soon as the bank's response to your dispute is unsatisfactory, or the moment you receive a SARFAESI notice despite an unresolved objection. You especially need legal help if: the disputed amount is significant; the bank has ignored your written representation; the Banking Ombudsman process has not resolved the issue within a reasonable time; or the bank moves toward SARFAESI recovery action while your objection is still pending. A lawyer can draft a legally precise representation, correspond with the bank on your behalf, and prepare the ground for a DRT challenge if that becomes necessary — all of which carries far more institutional weight than a borrower acting alone.

DRT as Final Recourse

If the bank proceeds with SARFAESI recovery action — issuing a demand notice or moving toward possession — despite a valid, well-documented, and unresolved dispute about the NPA classification, the Debt Recovery Tribunal (DRT) is your final and most powerful recourse. Under Section 17 of the SARFAESI Act, you can file an application challenging both the underlying classification and the recovery measure. The DRT has previously set aside bank action where it found that a borrower's genuine dispute was not properly examined before recovery proceedings were initiated. This is a technical process requiring proper documentation and legal drafting, which is where experienced representation becomes essential.

Frequently Asked Questions