BANKING REGULATION ACT, 1949 RESERVE BANK OF INDIA ACT, 1934 THE SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSETS

AND ENFORCEMENT OF SECURITY INTEREST (SARFAESI) ACT, 2002

Submitted By
Group-05
Sayantan Bhowmik Apoorva L. Pratik Parekh Shrey Chaturbedi Mohit Kohli

BANKING REGULATION ACT, 1949

BANKING REGULATION ACT, 1949

Permitted Business of Banks
Acting as agent for any Government or local authority or any other person or persons. Carrying on transacting every kind of guarantee and indemnity business. Managing, selling and realizing any property which may come into the possession of the company in satisfaction of any of its claim. Acquiring and holding and generally dealing with any property

Business Prohibited for Banks

No banking company shall directly on indirectly deal in buying, selling or battering of goods except in connection with realization of securities and bills of exchange.

Licensing of Banking Companies

Approval of license can be granted if company statistics following condition Company will be in position to pay its present future depositors in full as their claims accrue. Affair of the company are not detrimental to the interest of the preset or deposits. Management of the company will not be to public interest or depositors. RBI can cancel license of any Banking Company if it fails to comply with above mentioned condition.

RESERVE BANK OF INDIA ACT, 1934

Central Banking Function

Issue of Currency Banker to Government
The RBI acts as a banker to Government of India.
Maintaining cash balance Receiving and making payments for the Government. Managing public debt. Advising Government on floating of loans and legislation affecting banking.

 Foreign Exchange Management Control over Non-Banking Institutions Receiving Deposits

Registration Liquidity Provisions Reserve Fund Prohibition of issue of Prospectus/Advertisement Statutory Report

THE SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST (SARFAESI) ACT, 2002

INTRODUCTION
The 3 aspects of the SARFAESI Act: To provide legal framework Transfer of NPAs Enforcement of security interest

LEGAL TERMS
Financial Institution Financial Asset Non Performing Assets Asset Reconstruction Company / Securitization Company Reconstruction Company Property Interest & Principal Obligator Originator

 Non-performing asset-"non-performing asset" means an asset or account of a borrower, which has been classified by a bank or financial institution as sub-standard, doubtful or loss asset. "obligor" means a person liable to the originator, to pay a financial asset or to discharge any obligation in respect of a financial asset, whether existing, future, conditional or contingent and includes the borrower

 "originator" means the owner of a financial asset which is acquired by a securitisation company or reconstruction company for the purpose of securitisation or asset reconstruction "reconstruction company" means a company formed and registered under the Companies Act, 1956 (1 of 1956) for the purpose of asset reconstruction

 "securitisation" means acquisition of financial assets by any securitisation company or reconstruction company from any originator, whether it raises funds from qualified institutional buyers by issue of security receipts representing undivided interest in such financial assets or otherwise.

 "security receipt" means a receipt or other security issued by a securitisation company or reconstruction company to any qualified institutional evidencing the purchase or acquisition by the holder thereof, of an undivided right, title or interest in the financial asset involved in securitisation.

 Security interest-"security interest" means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified.

METHODS FOR RESOLUTION OF NON-PERFORMING ASSETS

Securitization
Definition - Conversion of Assets into marketable securities Distinction : Assets Backed

Asset Reconstruction
Purpose:
Registration with RBI Effect of non-registration

In case of non compliance

Securitization and asset reconstruction

Prime object of securitization is to sell secured NPA loans to investors via Securitization company. Designing scheme for each set of asset and invites qualified institutional buyers(QIB). Issue receipt to QIB respective to their interest. Securitization company realizes the receipt and redeem the investment by paying the proceeds to QIB.

Enforcement of security interest

To issue demand notice To give notice to any person who has acquired any of the secured assets To ask any debtor of the borrower to pay any sum

CASE
M/s. Bharat Steel Tubes Ltd. Petitioner(s) Vs. IFCI Limited Respondent(s) Case filed on 11/30/2010. Name of the Judge: Honble Mr. Justice Altamas Kabir and Honble Mr. Justice Cyriac Joseph.

Subject Index: Debts Recovery Act, 1993 section 17 application filed under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 section 13(2)