Sarface Act 2002

In: Social Issues

Submitted By gurpreet108
Words 282
Pages 2

Sarfaesi act ­ Essay ­ Sanay1988

What is Sarfaesi?
The Securitization & Reconstruction of Financial Assets & Enforcement of Security Interest
Act,2002 (SARFAESI) empowers banks /financial institutions to recover their non­performing assets without intervention of court. The Act provides 3 alternate methods for recovering of NPA namely­
Asset Reconstruction
Enforcement of security without intervention of court
Provisions of this Act are applicable only for NPA loans with outstanding balance above 1 lakh rupees. NPA loan accounts where the amount is less than 20% of the principal and interest are not eligible to be dealt with under this Act.
NPAs should be backed by securities charged to the bank by way of hypothecation or mortgage or assignment.Security interest by way of lien,pledge,hire purchase and lease not liable for attachment under Sec 60 of CPC ,are not covered under this Act.
Strengths of the Act­
The Act empowers the Bank:
1.To issue demand notices to the defaulting borrower and guarantor,calling upon them to discharge their dues in full within 60 days from the date of notice. 2.To give notice to any person who has acquired any of the secured assets from the borrower to surrender the same to the bank. 3.To ask any debtor of the borrower to pay any sum due or becoming due to the borrower.
If the borrower fails to comply with the notice,the Bank may take recourse to one or more of the following measures­
1.Take possession of the security.
2.Sale or lease or assign the right over the security.
3.Manage the same or appoint any person to manage the same

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