How Bank Lilami Works in Nepal: From Notice to Handover

Every lilami starts with a loan secured against collateral, known as धितो (dhito). The collateral might be land, a house, a vehicle, machinery or shares. When a borrower falls behind on repayments, the bank normally contacts the borrower and gives notice before moving towards a sale. Many overdue loans are settled at this stage through repayment or restructuring, and never reach auction.

If the loan stays unpaid, the bank can decide to sell the collateral to recover what it is owed. Banks and financial institutions in Nepal are regulated by Nepal Rastra Bank, and the way they recover loans is shaped by the law, by regulation and by each bank’s own policies.

The sale is announced in a public notice, the लिलामी सूचना (lilami suchana). Banks commonly publish it in a newspaper and often on their website as well. For a buyer, the notice is the key document. It usually names the borrower or owner, describes the asset, sets the base price and explains how to bid, how much deposit to submit, the deadline, and when the bids will be opened or the auction held.

One notice can cover several properties, each with its own base price. Notices for large assets, such as a hydropower project or a factory, may be published by a lead bank on behalf of a group of lenders.

Between publication and the bidding deadline there is a period in which interested buyers can study the notice, inspect the property and check the documents. This is the time to visit the site, ask the bank for copies of the lalpurja and other records, and verify them at the relevant government offices. The notice, or the bank, will say how inspections are arranged.

During this period the borrower may still settle the loan, in which case the auction can be called off. Notices can also be amended or postponed, so check with the bank shortly before you submit a bid.

Bids are submitted to the auctioning bank in the way its notice sets out. Many banks use sealed bids (बोलपत्र) that must reach the bank before a deadline; others hold an open auction in which bidders compete on the day. Either way, the bank normally requires a deposit (धरौटी) with each bid, along with identity documents and, for companies, registration documents.

The bank compares the bids with the base price and the conditions in the notice. A bid below the base price, or one that does not meet the conditions, may be rejected.

After the deadline, the bank opens or evaluates the bids and identifies the highest qualifying bidder. The notice usually says whether bidders may attend the opening. The successful bidder is told how and by when to pay the balance, and the other bidders’ deposits are returned on the terms in the notice.

If no acceptable bid comes in, the bank decides what to do next. It may republish the notice and run the auction again, possibly on revised terms, and in some cases a bank may take the asset onto its own books. What happens depends on the bank and the rules it follows.

The winning bidder pays the balance within the time allowed in the notice. If payment is not made on time, the bank may cancel the sale, and the deposit may be forfeited under the terms of the notice.

Once the full amount is received, the bank provides the documents needed to transfer ownership. For land and buildings, the transfer is registered at the Land Revenue Office (मालपोत कार्यालय) and a new lalpurja is issued in the buyer’s name. For vehicles, the ownership transfer (नामसारी) is done at the Transport Management Office. For shares, the transfer goes through the depository system or the company’s share registrar. The notice states which fees and taxes the buyer is responsible for.

Handing over possession is the final stage. If the property is empty, this can be straightforward. If someone is still living in or using it, possession may take longer, so ask the bank before bidding how it deals with occupied property.

AuctionMandu lists lilami notices from banks across Nepal on its auctions page, with the bank’s contact details on every listing. It does not run auctions or accept bids. Use it to find notices in districts such as Chitwan or Rupandehi, then contact the bank for the full notice and the next steps. If you are new to bank auctions, start with how to buy bank auction property in Nepal.