Lenders may have to take massive action and guarantees in the next six months as the Reserve Bank of India (RBI) requires lenders to display information on borrowers holding secured assets under financial asset securitizations and restructurings on their websites. Enforcement of Rights and Interests Act (SARFAESI), 2002.
While this information is helpful for potential buyers who want to purchase an asset sold/auctioned by a lender as the details of “Securities Owned” and “Name of Ownership Holder of Securities Owned” will be easily available When verifying online, bank personnel may have to upload the required information within a stipulated time.
Upload details (Branch Name, State, Borrower Name and Registered Address, Guarantor Name and Registered Address (if applicable), Outstanding Amount, Asset Classification, Asset Classification Date, etc.) Bank since the SARFAESI Act, 2002 came into force Economists said the six-month deadline set by the Reserve Bank of India could be a tall order.
Banks issue thousands of collection notices under the Act each year. The RBI said that the first list containing details of secured assets owned under the SARFAESI Act, 2002 should be published on the RE website within six months from the date of this notification and the list should be updated every month. The central bank said this was part of a drive to increase transparency.
The central bank directive applies to commercial banks, urban cooperative banks/state cooperative banks/central cooperative banks, all-India financial institutions, non-banking financial companies (including housing finance companies) and asset reconstruction companies
“The notice does not clarify whether SARFAESI data must be uploaded with retrospective or prospective effect. What about secured assets acquired and sold in the past? If that also had to be included, it would be a very large list and the data would need to be collected .
“Assets are also owned and sold on site and not necessarily at a centralized level,” a private sector bank official said.
The SARFAESI Act, 2002 provides a conducive legal framework to banks and financial institutions to recover amounts exceeding Rs. Arrears.
Any aggrieved debtor/borrower can file a securitization application before the Debt Recovery Tribunal (DRT) to fight the action taken by the secured creditor/financial institution under the SARFAESI Act. Decisions of the DRT can be challenged before the Debt Recovery Appeal Tribunal (DRAT).