Statutory Demand Notice Format Under Section 25 of the Payment & Settlement Systems Act, 2007 (e-NACH / ECS / AutoPay Dishonour)
Executive NBFC Counsel Brief (IND-02 Spoke)
Built for NBFCs, digital lenders, and HFCs inside our NBFC & Fintech Loan Recovery Hub, this Section 25 PSS Act notice captures UMRN, NPCI return memo particulars, and the mandatory Suman Sethi bifurcation—demanding the exact bounced e-NACH/ECS/AutoPay EMI separately from total loan recall so Magistrates never quash your complaint.
Notice Dispatch Limit
30 Days
From NPCI return memo receipt
Borrower Cure Period
15 Days
For exact bounced Part I EMI
Criminal Penalty
2 Yrs / 2x Fine
Full s.138 NI Act parity (s.25(5))
Admissible Service
Email + WA + RPAD
BSA 2023 s.63 & UMRN logs
Critical Legal Trap for NBFCs & Fintechs
Why Demanding Total Loan Balance Quashes Section 25 Notices
In high-volume digital lending, NBFCs and fintechs routinely download generic Section 25 notices from public template portals and merge them with a loan recall letter—demanding the entire recalled loan principal, future EMIs, and penal charges as a single lump sum. Under Section 25(5) of the Payment and Settlement Systems Act, 2007, Chapter XVII of the Negotiable Instruments Act, 1881 applies mutatis mutandis, including the Supreme Court's strict rule in Suman Sethi v. Ajay K. Churiwal ((2000) 2 SCC 380).
Under Suman Sethi, if a statutory demand notice fails to make an unmistakable, severable demand for the exact dishonoured e-NACH, ECS, or UPI AutoPay installment amount, defence counsel immediately moves to quash the complaint before the Judicial Magistrate First Class (JMFC) or Metropolitan Magistrate (MM). Whether you are pursuing NBFC unpaid dues recovery or calibrating small-ticket digital loan & BNPL recovery economics, your notice must isolate the bounced mandate amount in Part I while keeping any accelerated loan balance strictly separate in Part II.
Our interactive workspace below builds this dual-demand structure automatically—capturing the 20-character UMRN, NPCI return memo date, exact return reason code, and Sponsor Bank branch required under Dashrath Rupsingh Rathod and Section 142(2) NI Act jurisdiction rules.
Live Draft & Suman Sethi Bifurcation Engine
Interactive Section 25 PSS Act Notice Workspace
Populate your NBFC particulars, 20-character UMRN, NPCI return memo date, and exact bounced EMI below to generate a court-tested Section 25(1)(b) statutory notice in Word (.doc) or PDF.
Select a lending preset, enter UMRN & NPCI return memo fields, and keep Part I (exact bounced EMI) strictly separated from Part II (total loan recall).
Suman Sethi Dual-Demand Safe
2. NBFC / Bank & Borrower Particulars
3. Mandate (UMRN) & NPCI Return Memo Details
4. Bifurcated Demand (Suman Sethi Rule)
Magistrate Quash Guard: Part I demands strictly ₹18,450/- within 15 days under s.25(1)(c). Part II never merges into the statutory 15-day criminal demand.
Live Advocate-Vetted Section 25 Notice Preview
Ready for Word (.doc) export, clipboard copy, or Bar Council advocate dispatch
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STATUTORY DEMAND NOTICE UNDER SECTION 25(1) OF THE PAYMENT AND
SETTLEMENT SYSTEMS ACT, 2007 (READ WITH SECTION 138 NI ACT, 1881)
VIA SPEED POST RPAD / VERIFIED EMAIL / BUSINESS WHATSAPP
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Ref. No.: CFS/PSS25/2026-27/9042
Date : 14 November 2026
TO:
Mr. Rohan S. Sharma
Flat 304, Emerald Residency, Wakad, Pune - 411057
UNDER INSTRUCTIONS FROM AND ON BEHALF OF OUR CLIENT:
Crestline FinServe NBFC Ltd.
4th Floor, Trade Tower B, Bandra-Kurla Complex, Mumbai - 400051
ISSUED BY:
Adv. R. V. Deshmukh, Empanelled NBFC Counsel
Enrolment / ID: MAH/4182/2014 (Bar Council of Maharashtra & Goa)
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SUBJECT: STATUTORY DEMAND NOTICE UNDER SECTION 25(1)(b) OF THE
PAYMENT AND SETTLEMENT SYSTEMS ACT, 2007 FOR DISHONOUR OF E-NACH
ELECTRONIC FUNDS TRANSFER (UMRN: HDFC7021000004918273) OF RS. 18,450/-
(LOAN A/C NO.: DPL-2026-8841209)
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Sir / Madam,
Under instructions from and on behalf of Crestline FinServe NBFC Ltd. (hereinafter referred to as "Our Client"), we hereby serve upon you the following Statutory Demand Notice under Section 25 of the Payment and Settlement Systems Act, 2007 ("PSS Act"):
1. LOAN FACILITY & ELECTRONIC FUNDS TRANSFER MANDATE:
That you approached Our Client and availed a Unsecured Digital Personal Loan under Loan Account No. DPL-2026-8841209. In discharge of your legally enforceable debt and scheduled installment liability, you voluntarily executed and registered an Electronic Funds Transfer mandate via e-NACH bearing Unique Mandate Registration Number (UMRN) HDFC7021000004918273, drawn on State Bank of India (Destination Account), authorizing periodic debit in favour of Our Client's collection account maintained with HDFC Bank Ltd., Nariman Point Branch, Mumbai (Payee Collection Account).
2. PRESENTATION & DISHONOUR OF ELECTRONIC FUNDS TRANSFER:
That in accordance with the agreed repayment schedule, Our Client initiated electronic funds transfer under UMRN HDFC7021000004918273 on 05 November 2026 for the exact installment sum of Rs. 18,450/-. However, the said electronic funds transfer was returned unpaid/dishonoured by your banker via NPCI / Sponsor Bank Return Memo dated 06 November 2026 with the remark "01 - Funds Insufficient".
3. TIMELY STATUTORY NOTICE UNDER SECTION 25(1)(b) PSS ACT:
That Our Client received intimation of the aforesaid dishonour on 06 November 2026 and is issuing this statutory written demand well within the prescribed 30-day statutory period under Section 25(1)(b) of the Payment and Settlement Systems Act, 2007.
4. BIFURCATED DEMAND SCHEDULE (SUMAN SETHI COMPLIANCE SAFEGUARD):
PART I — EXACT STATUTORY DEMAND UNDER SECTION 25(1)(c) PSS ACT:
• Mandate Channel & UMRN ......... e-NACH / HDFC7021000004918273
• Presentation & Return Date ..... 05 November 2026 / 06 November 2026
• NPCI Dishonour Reason Code ..... 01 - Funds Insufficient
• EXACT BOUNCED MANDATE AMOUNT ... Rs. 18,450/-
(Payable within 15 days of receipt to cure Section 25 offence)
PART II — SEPARATE INFORMATIONAL STATEMENT OF ACCELERATED LOAN BALANCE
(STRICTLY SEVERABLE FROM THE STATUTORY SECTION 25(1)(c) DEMAND ABOVE):
Without prejudice to and strictly separate from the unequivocal statutory demand of Rs. 18,450/- in Part I above, you are notified that due to your payment default under the Loan Agreement, the total outstanding recalled/foreclosure balance under Loan A/c No. DPL-2026-8841209 stands at Rs. 4,20,000/-. Payment of Rs. 18,450/- within 15 days shall satisfy the statutory criminal liability under Section 25 PSS Act for the above dishonoured mandate, while Our Client reserves civil/arbitral remedies for any remaining contractual balance.
5. STATUTORY 15-DAY DEMAND FOR PAYMENT (SECTION 25(1)(c)):
You are hereby called upon to make payment of the EXACT DISHONOURED ELECTRONIC FUNDS TRANSFER AMOUNT OF RS. 18,450/- (Rupees 18,450 Only) to Our Client within fifteen (15) days from the date of receipt of this Notice via RTGS/NEFT/UPI/authorized payment link (https://pay.crestlinefinserve.in/nach-cure).
6. CRIMINAL & CIVIL CONSEQUENCES OF NON-COMPLIANCE:
Take notice that if you fail to pay the aforesaid exact sum of Rs. 18,450/- within 15 days of receipt hereof, Our Client shall be constrained to file a criminal complaint against you under Section 25(1) read with Section 25(5) of the Payment and Settlement Systems Act, 2007 (carrying imprisonment up to two years, or fine up to twice the amount of the electronic funds transfer, or both) before the jurisdictional Judicial Magistrate First Class / Metropolitan Magistrate where HDFC Bank Ltd., Nariman Point Branch, Mumbai (Payee Collection Account) is situated (Section 142(2) NI Act principle), entirely at your risk, cost, and consequences.
7. ELECTRONIC EVIDENCE & PRESERVATION:
Electronic records of NPCI return logs, UMRN registration, and Email/WhatsApp/Speed Post RPAD dispatch metadata are preserved with Section 63 Bharatiya Sakshya Adhiniyam (BSA), 2023 certification for judicial production.
Yours faithfully,
Adv. R. V. Deshmukh, Empanelled NBFC Counsel
MAH/4182/2014 (Bar Council of Maharashtra & Goa)
For and on behalf of Crestline FinServe NBFC Ltd.
Need Panel Advocate Letterhead + Tri-Channel RPAD Proof?Test 1 live e-NACH Section 25 notice or upload a monthly NPCI bounce CSV batch.
Establishes the sanctioned loan account, legally enforceable EMI debt, and voluntary registration of the e-NACH, physical NACH, ECS, or UPI AutoPay mandate.
NI Act s.142(2) & PSS Act s.25(5)
2. UMRN & Sponsor Bank Anchor
Specifies the 20-character Unique Mandate Registration Number (UMRN) and the NBFC's Sponsor/Collecting Bank branch to establish territorial Magistrate jurisdiction.
PSS Act s.25(1)(a)-(b)
3. Presentation & NPCI Return Memo
Records the exact presentation date, NPCI return memo date, and dishonour reason code (such as 01 Insufficient Funds or 04 Mandate Revoked) within the 30-day notice window.
Suman Sethi v. Ajay K. Churiwal
4. Suman Sethi Bifurcated Schedule
Separates Part I (exact bounced installment payable in 15 days) from Part II (optional informational total loan recall balance) so Magistrates never quash for vagueness.
PSS Act s.25(1)(c) & s.25(1)
5. 15-Day Cure & Penal Warning
Demands payment within 15 days of receipt and warns of criminal prosecution carrying up to 2 years imprisonment or fine up to twice the bounced EFT amount.
BSA 2023 s.63 & General Clauses s.27
6. BSA s.63 Electronic Preservation
Preserves NPCI return XML/CSV logs, Speed Post RPAD tracking, email headers, and WhatsApp delivery receipts for Magistrate cognizance and ODR settlement.
Omnibus Loan Recall Without Specifying Exact Bounced Instrument Invalidates Notice
Suman Sethi v. Ajay K. Churiwal — Supreme Court of India
The Supreme Court held that a statutory demand notice must make an unmistakable, severable demand for the exact dishonoured instrument amount. If a creditor lumps other charges or the entire loan balance into one indivisible demand without clearly specifying the bounced amount, the notice is bad in law; however, if the bounced amount is demanded distinctly alongside a separate statement of other dues, the notice remains valid.
Drafting Impact: Every NBFC Section 25 PSS Act notice must isolate Part I (exact bounced e-NACH/ECS amount) from Part II (informational total loan recall balance) to survive Magistrate quashing.
(2014) 9 SCC 129 & s.142(2) NI ActCreditor Prosecution Rule
Territorial Jurisdiction Anchored to Payee's Sponsor / Collecting Bank Branch
Dashrath Rupsingh Rathod v. State of Maharashtra & 2015 Statutory Amendment
Following the Supreme Court's ruling in Dashrath Rupsingh Rathod and Parliament's subsequent insertion of Section 142(2) of the NI Act (applicable mutatis mutandis to Section 25(5) PSS Act), criminal complaints for electronic funds transfer dishonour lie where the payee/NBFC maintains its collection bank account.
Drafting Impact: Explicitly pleading the NBFC's Sponsor Bank branch and IFSC in the Section 25 notice prevents jurisdiction objections and enables centralized Magistrate filings.
PSS Act s.25(5) ParityCreditor Prosecution Rule
Section 25 Electronic Funds Transfer Dishonour Carries Full Section 138 NI Act Parity
Payment and Settlement Systems Act, 2007 — Section 25(1) to (5)
Section 25(5) expressly applies Chapter XVII of the Negotiable Instruments Act, 1881 (Sections 138 to 147) to electronic funds transfer dishonour—meaning the 30-day notice window, 15-day cure period, 30-day complaint limitation, and 2-year imprisonment / 2x fine penalty apply identically to e-NACH, ECS, and UPI AutoPay bounces.
Drafting Impact: Empowers NBFCs and digital lenders to prosecute digital mandate defaults criminally without needing physical post-dated cheques.
Illustrative Dual-Demand Schedule
Worked Example: &rupee;18,450 Bounced EMI vs &rupee;4.20L Recall
Suppose an unsecured borrower defaults on a &rupee;18,450 e-NACH installment (UMRN HDFC7021000004918273) while the total accelerated loan balance stands at &rupee;4,20,000. For SME working capital or personal loan defaults, your Section 25 notice must separate the two demands as shown below (or pair with a separate Loan Recall Notice):
Demand Schedule Head
Statutory Treatment
Amount (INR)
Part I: Exact Bounced e-NACH EMI
Statutory 15-day demand u/s 25(1)(c) PSS Act
&rupee;18,450
Part II: Total Recalled Loan Balance
Strictly severable informational notice for civil/arbitral track
&rupee;4,20,000
Empanelled Advocate Dispatch & CSV Batch Engine
Institutional Dispatch: Test 1 Notice or Upload Bounce CSV
Track 1 • Self-Serve Single e-NACH Test
Test 1 Live Section 25 Notice Now (&rupee;999)
Have an empanelled advocate verify your UMRN, NPCI return memo date, and bifurcated Suman Sethi demand schedule, then dispatch via Email, Business WhatsApp, and Speed Post RPAD within 24 hours.
✓ Exact bounced EMI separated from total loan recall balance
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Why do Magistrates quash Section 25 PSS Act notices that demand the entire loan balance?+
Under Section 25(5) of the PSS Act read with the Supreme Court ruling in Suman Sethi v. Ajay K. Churiwal (2000) 2 SCC 380, a statutory demand notice must unmistakably demand the exact dishonoured electronic funds transfer amount. If an NBFC demands only the total recalled loan principal or foreclosure balance without separately specifying the exact bounced e-NACH/ECS installment, the notice is held vague and the complaint is liable to be quashed.
Can an NBFC mention the total recalled loan balance in a Section 25 notice?+
Yes, provided it is strictly bifurcated and severable. Our template places the exact bounced e-NACH/ECS installment in Part I as the statutory 15-day demand under Section 25(1)(c), and lists the total accelerated loan balance in Part II as a separate informational statement without prejudice to civil or arbitral remedies.
What is the exact timeline for sending a Section 25 PSS Act legal notice?+
The lender must dispatch the statutory written demand notice within 30 days of receiving the NPCI / Sponsor Bank return memo (Section 25(1)(b)). The borrower then has 15 days from receipt to pay the exact bounced amount (Section 25(1)(c)). If unpaid, the criminal complaint must be filed within 30 days after expiry of the 15-day window.
Does Section 25 of the PSS Act apply to UPI AutoPay and e-NACH mandate bounces?+
Yes. Section 25 covers any 'electronic funds transfer' initiated by a person instructing a bank or system participant to debit an account—which includes e-NACH, physical NACH, ECS, and NPCI UPI AutoPay mandates—when dishonoured for insufficient funds, exceeding arrangement, or mandate revocation/stop-payment.
Which court has jurisdiction to try a Section 25 PSS Act e-NACH bounce complaint?+
Applying Section 142(2) of the Negotiable Instruments Act, 1881 via Section 25(5) of the PSS Act, the Judicial Magistrate First Class (JMFC) or Metropolitan Magistrate (MM) having territorial jurisdiction over the NBFC's Sponsor/Collecting Bank branch where the EMI proceeds are credited has jurisdiction.
What NPCI details are mandatory inside a court-tested Section 25 demand notice?+
Your notice must state the 20-character UMRN (Unique Mandate Registration Number), mandate channel (e-NACH/ECS/UPI AutoPay), presentation date, NPCI return memo date, exact dishonour reason code (e.g., 01 Insufficient Funds, 04 Mandate Revoked), Sponsor Bank branch, and exact bounced EMI amount.
