What is EMD in a bank auction?
last updated 2026-07-21
EMD — earnest money deposit — is a refundable deposit you pay to take part in a bank e-auction. It is commonly around 10% of the property's reserve price, though the exact figure is set in each sale notice. Lose the auction and it is refunded; win and it counts towards your purchase; win but fail to pay the balance and you forfeit it.
Why banks ask for an EMD
A bank e-auction under the SARFAESI Act sells a property a borrower pledged as security and then defaulted on. The earnest money deposit is how the bank filters serious bidders from browsers: you put money down before the auction to show you intend to bid and can pay. It is a deposit, not a fee — for everyone except a defaulting winner, it comes back.
How much is the EMD?
The amount is fixed per property and stated in the sale notice. In practice it is commonly about 10% of the reserve price (the minimum bid), but treat that as a rule of thumb, not a guarantee — always read the figure in the notice for the specific property. On a property with a ₹25,00,000 reserve, a 10% EMD is ₹2,50,000.
How and when you pay it
- Before the auction. The notice sets a last date and time to submit the EMD — miss it and you cannot bid.
- To the account in the notice. Payment is usually by online transfer (NEFT / RTGS) to the account the sale notice specifies, or by demand draft, along with your KYC documents.
- Once cleared, the bank or the auction platform issues your login to bid in the online auction.
What happens to your EMD after the auction
| If you… | Then your EMD… |
|---|---|
| Do not win | Is refunded, typically to the same account within a few working days, without interest. |
| Win the auction | Is adjusted towards the sale price — it becomes part of your payment, not an extra cost. |
| Win but fail to pay the balance | Is forfeited to the bank, and the property can be re-auctioned. |
Under the Security Interest (Enforcement) Rules, a winning bidder pays 25% of the sale price (the EMD counts towards this) immediately or by the next working day, and the balance 75% within 15 days — a period the bank may extend in writing. Exact timelines and payment terms vary by notice, so confirm them with the bank before you bid.
Before you commit an EMD, check the property
An EMD is real money at risk on a property sold as-is-where-is: the bank makes no promise about its condition, occupancy or encumbrances. Before you put money down, it is worth checking the things a sale notice does not spell out — whether the reserve is actually below local market rates, what the location is like, whether possession is physical or only symbolic, and what dues might ride along with the property. That verification step is exactly what AuctionScope is built to help with.
Frequently asked questions
Is the EMD refundable?
Yes. If you do not win the auction, the EMD is refunded — normally to the same account you paid from, within a few working days, without interest. You only lose it if you win and then fail to pay the balance within the stipulated time.
How much EMD do I need to pay for a bank auction?
It is set per property in the sale notice and is commonly about 10% of the reserve price, but the exact amount is whatever the notice states — always check it for the specific property.
Does the EMD count towards the purchase price if I win?
Yes. For the winning bidder the EMD is adjusted against the sale price — it becomes part of the 25% due immediately, not an additional cost on top of your bid.
Can I lose my EMD?
Only if you win the auction and then fail to pay the balance within the time the rules and the notice allow. In that case the deposit is forfeited to the bank and the property may be re-auctioned.