The Supreme Court of India has ruled that the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, will be applicable to state and multi-state cooperative banks.
The Apex court has also ruled that the Cooperative Banks have also come under the definition of banks under Banking Regulation Act, 1949. The apex court’s judgment notes that the aim behind this move was to remove the delays caused by going through the civil court or summary procedure under the Cooperative Societies Act. The Judgement was delivered by a 5-judge bench headed by Justice Arun Mishra.
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What is the SARFAESI Act?
Sarfaesi Act is Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. The banks utilize the act as a tool to recover bad loans, especially the non-performing assets. The act provides procedures to transfer Non-Performing Assets for the reconstruction of assets. It also enforces the security interests of the banks without the intervention of the court. In order to recover a debt, the act empowers the financial institutions in India to take over immovable property.
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