The SARFAESI Act empowers banks to recover NPAs without court intervention. Know your rights as a borrower — from challenging Section 13(2) notices to filing applications under Section 17 before the DRT.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) allows secured creditors to enforce their security interest without court intervention when a borrower defaults.
The process begins with a Section 13(2) demand notice giving 60 days to repay. If the borrower fails to comply, the bank can take possession of secured assets under Section 13(4). Borrowers can challenge these actions under Section 17 before the DRT.
Important defenses include challenging the classification as NPA, questioning the valuation of secured assets, pointing out procedural non-compliance, and highlighting violations of RBI guidelines. Timely legal action is critical — the limitation period for Section 17 applications is 45 days from the date of action taken.
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Disclaimer: This article is for general information only and does not constitute legal advice. For advice on your specific matter, please consult a qualified advocate.