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5 Common Challenges in Asset Reconstruction

Facebook Twitter Youtube Asset Reconstruction Companies (ARCs) play a crucial role in reviving distressed assets. However, the process of asset reconstruction is complex, demanding strategic, financial, and legal coordination. 1. Delayed Legal Processes Despite SARFAESI and DRT mechanisms, procedural delays often slow down asset realization. 2. Inaccurate Asset Valuation Improper valuation can lead to under-recovery […]

Asset Reconstruction Companies (ARCs) play a crucial role in reviving distressed assets. However, the process of asset reconstruction is complex, demanding strategic, financial, and legal coordination.

1. Delayed Legal Processes

Despite SARFAESI and DRT mechanisms, procedural delays often slow down asset realization.

2. Inaccurate Asset Valuation

Improper valuation can lead to under-recovery or failed auctions. Expertise in due diligence is essential.

3. Limited Investor Interest

Finding credible investors or buyers for stressed assets remains a challenge, especially for industrial or niche assets.

4. Regulatory Hurdles

Constant policy changes and compliance requirements from RBI can complicate recovery timelines.

5. Borrower Resistance

Borrowers often challenge recovery actions, adding litigation and negotiation hurdles.

Conclusion

Revox ARC combines legal expertise, forensic insight, and market intelligence to overcome these challenges and ensure efficient asset resolution.

Reconstruct assets. Recover value. Reinforce trust — with Revox ARC.

Understanding the SARFAESI Act in NPA Recovery

Understanding the SARFAESI Act in NPA Recovery Facebook Twitter Youtube 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.

Understanding the SARFAESI Act in NPA Recovery

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.