Introduction

The SARFAESI Act, 2002 (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act) has been one of the most powerful legal tools for banks and financial institutions in India. It enables them to recover non-performing assets (NPAs) without lengthy court procedures.

What is the SARFAESI Act?

The Act empowers banks and NBFCs to enforce their security interests in case of loan defaults. It allows lenders to seize, manage, and sell secured assets of borrowers to recover dues efficiently.

Key Provisions of the Act

• Section 13(2): Allows the lender to issue a notice to the borrower demanding payment within 60 days.

   

• Section 13(4): Grants power to take possession of the secured asset if the borrower fails to comply.

   

• Section 14: Enables assistance from district magistrates for asset possession.

   

Impact on NPA Recovery

The Act has significantly reduced the time and cost of recovery for financial institutions. By bypassing traditional litigation, lenders achieve faster resolutions and better asset value realization.