The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 is a significant piece of legislation in India aimed at improving the efficiency of the banking sector. Here are some key points of the SARFAESI Act:
- Enables banks and financial institutions to take over and manage the assets of defaulting borrowers in a timely manner.
- Allows banks to recover their non-performing assets (NPAs) by selling the collateral security without the intervention of the court.
- Provides a framework for banks and financial institutions to enforce their security interest in a more efficient manner, reducing the time and cost involved in the recovery process.
- Establishes the Debt Recovery Tribunals (DRTs) as the primary forum for resolution of disputes related to secured debt.
- Gives banks the power to take possession of the secured assets, manage them and sell them to recover their dues.
- Provides for penalties for obstruction of the recovery process by borrowers.
- The act applies to all banks and financial institutions regulated by the Reserve Bank of India.
Overall, the SARFAESI Act provides a framework for the effective and efficient recovery of NPAs by banks and financial institutions, reducing the time and cost involved in the recovery process.