SARFAESI ACT 2002

The Securitisation & Reconstruction of the

Financial Assets and Enforcement of
Security Interest Act 2002
Presented By
UJWAL BHUTADA
RAHUL GUPTA
KETAN KATE
ADVAIT MALVANKAR
Committee involved in Securitization
 Narasimham committee I & II

 Andhyarujina committee

Recommendations made by them

 Empower banks & FI’s to take the possession of the
assets & to sell them wihout the intervention of the
court, was enacted.
Segments:
There are three segments
• Securitisation

• Asset Reconstruction Companies

• Enforcement of Security Interest

Securitization
A careful structured process where by
loans and other receivables are packaged,
underwritten and sold in the form of
assets backed securities.
Securitization is mainly associated with
the assets of financial companies.
Parties to an Issue:
Originator
SPV
Obligors
Investor
Collection Agent
Credit rating agency
Credit enhancement provider
Merchant banker
Various stages involved in the working of
securitization are as follows:

• Identification stage/process

• Transfer stage/process

• Issue stage/process

• Redemption stage/process

• Credit Rating stage/process

Types of securitization
Pass through and pay through certificates
Preferred stock certificates
Asset based commercial papers
Due Diligence Study
 Study Of Asset

 Estimation Of Expenses

 Estimation Of Realizable Value

 Appointment Of Security Guard

Enforcement of Security Interest

Security Interest means a right, title and

an interest upon the property created in
favor of any secured creditor including a
mortgage, charge, hypothecation and
assignment other than those exempted.
Criteria for invoking the provisions of the
Act
 Contractual dues in the account should be RS 1lacs.

 Account should have become NPA as per RBI norms.

 Security must be specific,clear and available to the

Bank.

 60 days notice for security documents.

 Our bank must be the sole Banker to the borrower.

Exemption from Enforcement
 Contractual dues are below Rs 1 lakh
 Agricultural land
 Unpaid amout should be less than 20%
Procedure for proceeding
• Identification Of Accounts & Obtaining Approval

• Issue Of Notice

• Objection Received From Borrower

• Designating Authorized Officer

• 60 Days Notice

• Enforcement Of Action
Types Of Assets:
 Movable Assets

 Immovable Assets
Movable Assets:
 Taking Possession

 Valuation

 Manner Of Sale

 Sale Notice

 Publication of Sale Notice in Newspapers

 Inspection by Prospective Purchasers

Cont …..
 Sale By Public Tender

 Inspection by Prospective Purchasers

 Sale By Public Tender

 Issuance Of Sale Certificate

 Sale Of Other Movable Assets

 No Sale Or Transfer If Dues are Paid

Immovable Assests:
 Taking Possession

 Valuation – Sale Of Immovable Assests

 Appointment of manager
APPLICATION TO DRT:
• Application to drt by aggrieved person.
- Should file within 45 days
- No deposit is required
- If not decided within 4 months party can apporach
DART

• Appeal to DART(sec 17)

• Sarfaesi act and civil procedure code.

• Other matters.
THANK YOU