Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI)

A small manufacturer in Vasai takes a loan from a bank against his factory. The business slows, the instalments stop, and one morning the bank sends a notice giving him sixty days. If he does nothing, the bank can take the factory and sell it, without going to any court. How can a lender do that, and what can the borrower do about it? SARFAESI is the Act that gives banks this power, and it also lets them sell bad loans to specialist companies.

In two minutes

SARFAESI 2002 lets banks and financial institutions enforce security for a non-performing loan without court intervention, after a sixty-day notice, and lets them sell financial assets to asset reconstruction companies registered with the RBI; the borrower's remedy lies before the Debts Recovery Tribunal.

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