Banking and Finance

Recovery matters of Banking & Finance, Commercial Courts Act, 2015

We take up all types of matters in RDDBFI ACT, 1993, SARFAESI Act, 2002 in DRT, DRAT, Civil Writ in the High court of Delhi

Assistance provided to borrower starting from 13 (2 ) Notice, Negotiation from banking for one time settlement.

SARFAESI ACT, 2002

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI Act), 2002 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 right 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 action may also proceed against guarantor or sell the pledged asset, if any.

Banks utilize this act as an effective tool for bad loans (NPA) recovery. It is possible where non-performing assets are backed by securities charged to the Bank by way of hypothecation or mortgage or assignment.

Upon loan default, banks can seize the securities (except agricultural land) without intervention of the court.

SARFAESI is effective only for secured loans where bank can enforce the underlying security e.g.  hypothecation, pledge and mortgages. . In such cases, court intervention is not necessary, unless the security is invalid or fraudulent. However, if the asset in question is an unsecured asset, the bank would have to move the court to file civil case against the defaulters.