What is the Sarfaesi Act 2002?

The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (also known as the SARFAESI Act) is an Indian law. It allows banks and other financial institution to auction residential or commercial properties (of Defaulter) to recover loans.

What are the main features of sarfaesi Act 2002?

Salient features of the Act:

• securitise the financial assets (securitisation)
• Fund the securitisation.
• Incorporate companies as SCO (Securitisation Company) and RCO (Reconstruction Company)
• Enforce Security interest by the secured creditor (without court intervention)
• Act as an agent of banks.

What is the main objective of the Sarfaesi Act?

What are the objectives of SARFAESI Act 2002? The SARFAESI Act regulates the securitization and reconstruction of the financial assets. The Act provides a central database of security interests based on property rights or matters connected therewith or incidental thereto.

What is the process of sarfaesi act?

SARFAESI Act procedure If a borrower is unable to repay his loan (this includes home loans) for a period of six months, the bank has the legal right to send a notice to him, asking him to clear the dues in 60 days. The proceeds gained through the sale are used to first clear the outstanding dues of the bank.

What is the maximum and min limit of DRT under Sarfaesi Act?

20 lakh or more. The SARFAESI Act, 2002 aims to regulate securitization and reconstruction of financial assets and enforcement of security interest and to provide for a Central database of security interests created on property rights and for connected matters therewith.

How do you counter sarfaesi act?

If the borrower or any other person who had any tangible grievance against the notice issued u/s. 13(4) or action taken u/s. 14, then he/she could have availed remedy by filing an application u/s. 17(1) within 45 days from the date on which such measures were taken.

What is the difference between DRT and sarfaesi act?

Distinction between the two forums The first basic point of difference between the two tribunals is that DRT is regulated by SARFAESI Act and its Parent Act i.e. the DRT Act, on the other hand NCLT is regulated by the Companies Act and IBC.

How do you defend the sarfaesi act?

2. Writ petition challenging notice under section 13(2) The borrower can challenge the notice u/s. 13(2) of Act in the Civil Court as well as in the High Courts by way of writ jurisdiction to defend his case.

What are the powers of DRT?

The RDB Act, 1993 provides for establishment of Debts Recovery Tribunals (DRTs) with original jurisdiction and Debts Recovery Appellate Tribunals (DRATs) with appellate jurisdiction, for expeditious adjudication and recovery of debts due to banks and financial institutions, insolvency resolution and bankruptcy of …

What is DRT in sarfaesi act?

Any aggrieved debtor/borrower has recourse to filing appeal in the Debts Recovery Tribunal (DRT) against action under the SARFAESI Act and further recourse to appeal against the DRT’s decision is available in the Debts Recovery Appellate Tribunal.

Can DRT decide title?

Whilst the question of whether a valid mortgage exists would be a question to be determined by the DRT, being ancillary to the power exercised under Section 13 of the Securitisation Act, the DRT cannot go further to determine questions of title.

Who can go to DRT?

For debt less than 10,00,000, suite in civil courts may be initiated. Only Banks and Financial Institutions (which later includes Public Financial Institutions & Securitization company / Reconstruction company ) can file original application for recovery of Debts. No other type of application is entertained by DRTs.

What is the SARFAESI Act and what does it mean?

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (also known as the SARFAESI Act) is an Indian law .It allows banks and other financial institution to auction residential or commercial properties to recover loans.

Is the SARFAESI Act, 2002 applicable to RRBS?

The SARFAESI Act, 2002 is applicable to RRBs, SBI and its associates, Nationalised Banks, Co-opeative Banks apart from other Financial Institutions. However it is stated in the article that the ACt is not applicable to RRBs, Nationalised Banks, Cooperative Banks, State Bank of India and its Associate Banks.

Is the SARFAESI Act 2002 against natural justice?

The said legislation was challenged before many Courts as the same is unconstitutional, arbitrary and against natural justice. Also it was stated as leaning more towards the lenders.

How does SARFAESI Act help in recovery of NPAS?

The SARFAESI Act provides the following recovery channel for the recovery of NPAs, viz: (iii) Enforcement of Security without the intervention of the court. The RBI regulation and the statutory provisions under the SARFAESI Act, 2002 covers the Asset Construction. It comprises as under: