After the borrower has not paid the principal interest on the loan for one year, the bank can go for auction. Most of the banks and financial institutions have a loan agreement with the borrower for 3/3 months.

Generally, a borrower who has taken a loan from a bank should keep a close watch on the loan for 3 months and pay 5 percent provision as per the agreement.

If the borrower does not pay the principal interest for 6 months, such loan should be classified as inferior loan and 50 percent provision should be made. If the borrower does not pay the principal interest of the loan for 9 months, such loan should be kept in doubtful category and 50 percent provision should be made by the provision banks for the loan which has not paid the principal interest for one year.

In the meantime, the bank has to keep in touch with the borrower to pay the interest installment.

The bank has the right to blacklist 100% of the provisioned loans. But the bank issues a 35-day notice to the debtor before sending a letter to the CIB for blacklisting.