SECURITISATION & RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURED ASSETS ORDINANCE 2002 - SARFAESI Act - 2002

SECURITISATION & RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF

SECURED ASSETS ORDINANCE 2002 - SARFAESI Act - 2002

1. Is it necessary to classify the account as NPA for initiating action under the Act? YES

2. The above Act is applicable in respect of debts due to Nationalised Banks only

3. The Provisions of the Act are applicable in respect of All NPA a/cs with liability above Rs. 1 lac

4. Enforcement is not possible under this Act in respect of Time barred debts, where the present

liability is less than 20% of principal + int. &where the secured asset is an Agricultural Land

5. Whether limitation is suspended or saved while proceeding under the act? No

6. Movables seized under this Act have to be got valued by Valuer in the panel approved by the

Board of the Bank

7. When there is more than one creditor in respect of a secured asset, action under this Ordinance

can be initiated only if 75% of creditors in value agree

8. Whether advocate can issue notice under the Act? No.

9. Under SARFAESI ACT 2002 whether demand notice is required to be issued to Guarantor also?

Only when the guarantor extends his property as a security apart from his Personal guarantee

10. Can appeal under SARFAESI ACT 2002 would be made to DRT even in cases for claims less than

10 lakhs Appeal can be made with DRT in all the cases

11. For an agricultural loan, if any security other than agricultural land is taken whether it can be

enforced under the act? The Act is not applicable only where the security is agricultural land and

hence, we can enforce the securities in the referred case.

12. Can the Bank entrust the work of taking possession of securities to seizure agent? Authorised

officer alone is entitled to take possession of the property

13. Who is the authority to fix the reserve price when the assets are auctioned? Authorized officer in

consultation with the appropriate authority

14. Who can issue the sale certificate under the act? Authorised officer (SMGS IV and above)

15. Whether Banks attach salary of the borrower/guarantor under the act? No, as these are not

secured assets

16. Provisions of SARFAESI Act 2002 enables the Bank to sell their financial assets to Asset

reconstruction company AND Securitisation company

17. When Mortgaged property is a tenanted property before the mortgage whether under SARFAESI

Act Tenant can be evicted NO Bank has to evict the tenant only through eviction proceedings as per

Law covered under Indian Tenancy Act.

18. Whether the Lease/tenancy created after the Mortgage will bind the Bank No it is not binding

on the Bank

19. Whether the Mortgagor has powers to lease the property As per Sec 65A of Transfer of Property

Act the Mortgagor can lease the property but not for more than 6 months and that too the lease is

subject to mortgage