On 23 May 2026 it was reported that the Senate had approved the Financial Institutions (Recovery of Finances) Amendment Bill 2026. The report said the law was expected to come into force after the President's assent, and did not confirm National Assembly passage, so the current status should be checked before relying on it.
Key changes as reported
Borrowers who default on mortgaged (housing) finance would receive three written notices, each 30 days apart. If the dues remain unpaid after the final notice, the financial institution could auction the mortgaged property without first obtaining court approval.
An auction could not take place earlier than 15 business days after the notice is published. Borrowers would have five business days to match the highest bid, and banks would have to decide restructuring or settlement requests within 30 days. Deputy commissioners could be enlisted to secure possession, and banking courts would be barred from granting injunctions against recovery proceedings without first hearing the institution.
Practical impact
If enacted as reported, the timeline for defending mortgage enforcement would shorten considerably. Borrowers and guarantors should respond to each notice in writing, document repayments and restructuring requests, and seek advice before the final notice expires.
Key takeaways
- Three notices at 30-day intervals before a mortgage auction
- No prior court approval to auction, if enacted as reported
- Injunctions against recovery require the bank to be heard first
- Confirm the bill's current status before relying on it
Sources & further reading
This update is published for general information only.