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Asset Classification- 5
The Securitisation and
Reconstruction of Financial
Assets and Enforcement
of Security Interest Act, 2002
(SARFAESI)
In the event of default by a borrower, the bank
has the powers to
a) Take possession, sell or lease the secured assets.
b) Take over the management of the business of
the borrower.
c) Appoint a Manager (not below Scale-IV
Officers).
d) Recover money from the debtor of the borrower.
* Loans outstanding of Rs.1 lac & above
are covered by the Act.
*Agri. Loans and were 80% recovery has been
done are exempted.
* U/s 13(2) of the act, a secured creditor has
to serve 60 days’ notice before taking any of the measures under Section 13(4) of
the Act.
*After
service of notice if the borrower makes a representation or
raises any objection, the secured creditor shall
consider such representation or objection and if the same is acceptable or
tenable, the reasons for non-acceptance have
to be communicated within one week of receipt.
Central Registry under
SARFAESI Act,2002 ( CERSAI) Section20 of the SARFAESI act,2002provides
for setting up of a Central Registry for the purpose of registration of
transactions of securitization, asset reconstruction, and security interest
under the SARFAESIAct. Central Registry of Securitization, Asset Reconstruction
and Security Interest of India (CERSAI in short), a Government Company, licensed under Section 25 of the
Companies Act, 1956 has
been incorporated. CERSAI has become
operational from 31.3.2011.
Under Section 23 of the
SARFAESI Act, particulars of any charge creating a security interest over
property is required to be filed with the Registry within 30 days from the date
of creation. The Central Registrar may
allow the filing of particulars of such transaction or creation of security
interest within thirty days next following the expiry of the said period of
thirty days on payment of such additional fee not exceeding ten times the
amount of such fee Section 27 of the
SARFAESI Act provides that any default in filing the above mentioned
transactions shall be punishable with fine which may extend to Rs. 5000/-for
every day during which the default continues
Four Forms, viz. Form-I, Form-II, Form-III and Form-IV have been
prescribed for the purpose of filing particulars of the transaction to be
registered with the Central Registry.
FORM-I – To be used for filing
Particulars of Creation or Modification of Security Interest in favour of Secured Creditors.
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