The financial sector has been one of the key drivers in India’s efforts to achieve success in rapidly developing its economy. There is no legal provision for facilitating securitization of financial assets of banks and financial institutions. 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. The first asset reconstruction company (ARC) of India, ARCIL, was set up under this act.
Under this act secured creditors (banks or financial institutions) have many rights for enforcement of security interest under section 13 of SARFAESI Act, 2002. If borrower of financial assistance makes any default in repayment of loan or any installment and his account is classified as Non performing Asset by secured creditor, then secured creditor may require before expiry of period of limitation by written notice to the borrower for repayment of due in full within 60 days by clearly stating amount due and intention for enforcement. Where he does not discharge dues in full within 60 days, THEN WITHOUT INTERVENTION OF ANY COURT OR TRIBUNAL Secured creditor may take possession (including sale, lease, assignment) of secured asset, or take over management of business of borrower or appoint manager for secured asset or without taking any of these actions may also proceed against guarantor or sell the pledged asset, if any.
We at Chartered Accountant India not only advices our client how to handle your affairs in such a fashion not to get into any transactions which lead you to indulge into the draconian provisions of the Act but also assist you to get rid of the clichés of this Act if alleged under this Act.