SARFAESI Act-2002
SARFAESI Act-2002
The SARFAESI Act, 2002 empowers banks and financial institutions to recover secured loans without court intervention by enforcing their security interests over the borrower’s mortgaged or hypothecated assets.
Key Provisions:
Section 13(2):
The secured creditor (bank or financial institution) issues a 60-day notice to the borrower demanding repayment of the outstanding dues in full.
Section 13(4):
If the borrower fails to repay within 60 days, the secured creditor may take possession of the secured asset and sell it to recover dues without the intervention of any court or tribunal.
Section 14:
To obtain physical possession, the creditor may approach the District Magistrateor Chief Metropolitan Magistrate, who passes an order authorizing such possession, typically within 3 months.
Section 17:
The borrower has the right to appeal before the Debt Recovery Tribunal (DRT)against any action taken under Section 13(4).
Purpose:
The Act ensures faster recovery of secured loans, reduces pressure on civil courts, and strengthens the credit system by empowering lenders.