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WHAT IS SARFAESI ACT?

  • Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act lets the banks, other financial institutions of India auction commercial or residential properties for loan recovery.
  • The Act, was framed to allow the financial houses to assess the asset quality in different ways. In other words, the act was made to identify and rectify the problem of Non-Performing Assets through multiple mechanisms.
  • As per the Act, the financial institutions are entitled to issue notice to the defaulting loan takers as well as guarantors, asking them to clear the sum in arrears within 60 days from the date of issuing the notice.
  • Banks can also sell this property to a new person by asking him/her to remit these debts entirely over a period of time.
  • It also empowers banks and financial institutions to claim any debtor of the borrower to pay any sum due to the borrower.

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