SARFAESI Act, 2002

Recently, the Reserve Bank of India (RBI) asked banks to display information on borrowers linked to Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.

  • The Act allows banks and other financial institutions for auctioning commercial or residential properties to recover a loan when a borrower fails to repay the loan amount.
  • It enables banks to reduce their Non-Performing Assets (NPA) through recovery methods and reconstruction.
  • It is applicable only in the cases of secured loans where banks can enforce underlying securities such as hypothecation, mortgage, pledge etc.
  • In the case of unsecured assets, the bank would ....
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