SARFAESI ACT 2002 is an acronym for Securitizarion and Reconstruction of financial assests and enforcement of Security Act 2002 which came into force after Narasimham Committee I and II and Andhyarujina Committee made suggestions in order to form new legislation for securitization and empowering banks and financial institutions to gain possession of the securities and to sell them without any intervention of the court here. In this article, we will be covering everything related to this topic as it is very important from exam point of view.
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Importance of SARFAESI Act, 2002
Given below are some of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) important point:
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i. To regulate securitization and reconstruction of financial assets
ii. To Enforce the security interest
iii. Matters which are connected therewith or incidental thereto
iv. It extended to the whole of India and for all the financial institutions.
Amendment in the (SARFAESI) Act, 2002 was done vide the enforcement of the Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016.
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Applicability Of SARFAESI Act, 2002
The SARFAESI Act, 2002 deals in the given below:
- It deals with the Registration and regulation of Asset Reconstruction Companies (ARCs) by the Reserve Bank of India
- It helps in Facilitating securitization of financial assets of banks and financial institutions with or without the benefit of underlying securities
- It also covers the Promotion of seamless transferability of financial assets by the ARC to acquire financial assets of banks and financial institutions through the issuance of debentures or bonds or any other security as a debenture
- It also holds reliable for Entrusting the Asset Reconstruction Companies to raise funds by issue of security receipts to qualified buyers
- It also covers facilitating the reconstruction of financial assets which are acquired while exercising powers of enforcement of securities or change of management or other powers which are proposed to be conferred on the banks and financial institutions
- It covers the presentation of any securitization company or asset reconstruction company registered with the Reserve Bank of India as a public financial institution
- It also deals in defining ‘security interest’ to be any type of security including mortgage and change on immovable properties given for due repayment of any financial assistance given by any bank or financial institution
- It also helps in the Classification of the borrower’s account as a non-performing asset in accordance with the directions given or under guidelines issued by the Reserve Bank of India from time to time
- The officers authorized will exercise the rights of a secured creditor in this behalf in accordance with the rules made by the Central Government
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Given below is the list of document which is require :
i. Particulars of charge need to be filled
ii. Certificate of registration need to be submit
iii. An Instrument created for the charge
iv. Hypothecation Deed need to be submitted
v. Sanction Letter need to be submitted
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