1.what is SARFAESI Act 2002 ?
The full form of SARFAESI Act as we know is Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Banks utilize this act as an effective tool for bad loans (NPA) recovery. It is possible where non-performing assets are backed by securities charged to the Bank by way of hypothecation or mortgage or assignment.
At that same time we need to know right of borrower.
Rights Of Borrower :
1. The borrowers can at any time before the sale is concluded, remit the dues and avoid loosing the security.
2. In case any unhealthy/illegal act is done by the Authorised Officer, he will be liable for penal consequences.
3. The borrowers will be entitled to get compensation for such acts.
4. For redressing the grievances,the borrowers can approach firstly the DRT and thereafter the DRAT in appeal.
5. The limitation period is 45 days
and 30 days respectively .
2.Debt Recovery tribunals?
1. Prior to 90s, banks had very
hard time recovering bad loans.
2. Because often, borrowers (loan takers) would file frivolous cases in civil courts, then …taarikh pe taarikh, taarikh pe taarikh….proceeding would go on for years.
3.So 1993, Government established Debt Recovery Tribunals to deal with NPA matters.
4. Now borrower cannot approach"civil court, they’ve to goto special Debt Recovery Tribunal (DRT).
5. This led to some relief, but then DRTs clogged down by truckload of cases. (Even now,more than 60,000 cases pending with DRTs).
6. In 2002, Government came up
with new Act, named “SARFAESI Act”.
3.What is ARC?
1. Asset reconstruction company (ARC).
2. They buy NPA (Bad loans) from Banks and try to extract maximum money out of it=profit.
3.They’ve to register with Reserve Bank of India.
The full form of SARFAESI Act as we know is Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Banks utilize this act as an effective tool for bad loans (NPA) recovery. It is possible where non-performing assets are backed by securities charged to the Bank by way of hypothecation or mortgage or assignment.
At that same time we need to know right of borrower.
Rights Of Borrower :
1. The borrowers can at any time before the sale is concluded, remit the dues and avoid loosing the security.
2. In case any unhealthy/illegal act is done by the Authorised Officer, he will be liable for penal consequences.
3. The borrowers will be entitled to get compensation for such acts.
4. For redressing the grievances,the borrowers can approach firstly the DRT and thereafter the DRAT in appeal.
5. The limitation period is 45 days
and 30 days respectively .
2.Debt Recovery tribunals?
1. Prior to 90s, banks had very
hard time recovering bad loans.
2. Because often, borrowers (loan takers) would file frivolous cases in civil courts, then …taarikh pe taarikh, taarikh pe taarikh….proceeding would go on for years.
3.So 1993, Government established Debt Recovery Tribunals to deal with NPA matters.
4. Now borrower cannot approach"civil court, they’ve to goto special Debt Recovery Tribunal (DRT).
5. This led to some relief, but then DRTs clogged down by truckload of cases. (Even now,more than 60,000 cases pending with DRTs).
6. In 2002, Government came up
with new Act, named “SARFAESI Act”.
3.What is ARC?
1. Asset reconstruction company (ARC).
2. They buy NPA (Bad loans) from Banks and try to extract maximum money out of it=profit.
3.They’ve to register with Reserve Bank of India.
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