RBI Mandates Display of Secured Assets Acquired Under SARFAESI Act 2002

Narendra Kumar

03 Oct, 2023

Notification by (J.P. Sharma) Chief General Manager

1. As part of its efforts to increase transparency, Reserve Bank regulated entities (REs) that are secured creditors under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, 2002 have access to information about their borrowers. to provide that the RE has seized the collateral assets in accordance with the law.
2. RE will upload this information to the website in the format specified in the Schedule. The first list will appear on RE’s website within six months from the date of this circular, and the list will be updated monthly.

Lenders may face a difficult task in the next six months as the Reserve Bank of India (RBI) requires borrowers to display pledged properties on their websites as part of securitization and restructuring of financial assets. Be. This information is useful for prospective buyers wishing to purchase properties sold/auctioned by lenders, as it includes details of ‘subject to security’ and ‘security of title’. With online authentication, the banker has to bear the burden of uploading the required information within a given time.

Since 2002, when the SARFAESI Act came into force, the six-month deadline set by the RBI for providing details (branch name, state, name and registered address of the borrower, name and registered address of the certificate) is a major It is said that Bankers Challenge. May.

About SARFESI

The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, holds significant importance as legislation in India, granting banks and financial institutions the authority to seize and sell assets in the event of borrower default on loan obligations.

This Act establishes an efficient mechanism for secured creditors to retrieve their loans. A pivotal element of the SARFAESI Act involves disclosing information about assets held under its provisions. This blog aims to elucidate the importance of such information display and the measures implemented to safeguard its integrity.

More transparency

Banks send out thousands of collection letters each year. RBI said that the first list with details of guaranteed assets covered by the SARFAESI Act, 2002, will be displayed on RE’s website within six months from this cycle, and the list will be updated monthly. The central bank said this was part of a move towards greater transparency.

This Central Bank Directive is applicable to non-banking financial companies such as commercial banks, district co-operative banks/state co-operative banks/central co-operative banks, all financial institutions in India, housing finance companies, real estate redevelopment companies, etc.

“Whether SARFAESI data needs to be loaded retrospectively or in the future is not circular. What will happen to the safe properties I bought and sold in the past? If this were included, it would be a very large list of data collection.”

“Assets are being sold at the field level as well, not necessarily at the central level,” said one private banker.”

The SARFAESI Act, 2002 provides a legal framework that enables banks and financial institutions to recover repayments in excess of Rupees 1 million by initiating legal proceedings against the mortgaged property of the lender/guarantor.

The aggrieved borrower/borrower can approach the Debt Recovery Tribunal (DRT) to obtain a writ of action filed by the secured creditor/financial institution under the SARFAESI Act. The decision of the DRT can be challenged in the Debt Recovery Tribunal (DRAT).

Application

This notification Can be applied to:

• All Commercial Banks, including Small Finance Banks, Local Area Banks and Regional Rural Banks excluding Payment Banks
• All Primary (Urban) Co-operative Banks/ State Co-operative Banks/ Central Co-operative Banks
• All India Financial Institutions (Exim Bank, NABARD, NHB, SIDBI and NaBFID)
• All Non-Banking Financial Companies, including Housing Finance Companies
• All Asset Reconstruction Companies

Conclusion

The exhibition of information pertaining to secured assets in accordance with the SARFAESI Act plays a crucial role in guaranteeing transparency, equity, and efficacy in the process of recovery. This practice empowers borrowers, aids in attracting genuine buyers, and safeguards the interests of financial institutions. By embracing digital platforms and implementing robust security measures, the confidentiality and security of the exhibited information can be assured. However, challenges concerning privacy concerns and data accuracy must be addressed to uphold the exhibition’s credibility and effectiveness. The exhibition of information regarding secured assets under the SARFAESI Act represents a significant stride towards a more efficient and transparent recovery mechanism in India.