Thursday, 5 September 2019

Asset Classification-5 , Banking Fundamentals to Know for students.

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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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