Securitisation of financial assets
Acquisition of financial assets and the issue of security receipts to qualified buyers.
Undertaken by RBI-registered asset reconstruction companies
Secured asset legal support
The SARFAESI Act, 2002.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act lets a secured creditor enforce security without the intervention of a court — provided every procedural step is correct. That procedure is what we manage.
What the Act provides
Four mechanisms under the statute.
The Act created distinct routes for dealing with stressed financial assets. Only the third is exercised directly by a lender's own legal team.
Reconstruction of financial assets
Measures for management, sale, settlement or restructuring of an acquired asset, subject to RBI directions.
Undertaken by RBI-registered asset reconstruction companies
Enforcement of security interest
A secured creditor may enforce its security interest without the intervention of a court or tribunal, following the procedure in Section 13 and the Enforcement Rules.
Where our legal management support applies
Central registry
Registration of transactions of securitisation, reconstruction and creation of security interest.
Maintained under Chapter IV of the Act
Our procedural support
Where we carry the work.
Enforcement fails on procedure far more often than on merits. Each step below is drafted, filed, followed up and recorded.
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Demand notice
Drafting the demand notice under Section 13(2), calling on the borrower to discharge liabilities in full within sixty days.
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Representation & reply
Examining any representation or objection from the borrower and preparing the reasoned reply required within fifteen days under Section 13(3A).
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Possession notice
Drafting the possession notice on the measures taken under Section 13(4), with publication and affixation as the Enforcement Rules require.
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Section 14 application
Preparing and filing the application to the District Magistrate or Chief Metropolitan Magistrate, with the affidavit the section requires, and following it to order.
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Execution of the order
Coordination with the authorised officer, the revenue authorities and the local police station for execution of the order on the ground.
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Panchnama & inventory
Drawing the panchnama in the presence of witnesses and preparing the inventory of the property, in the forms the Enforcement Rules prescribe.
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Valuation & reserve price
Coordinating valuation by an approved valuer and, in consultation with the secured creditor, fixing the reserve price before sale.
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Sale & closure
Sale notice, publication and conduct of the auction, followed by reporting of the outcome and closure of the matter on record.
Statutory reference
The provisions each step rests on.
Timelines shown are those set by the Act and the Security Interest (Enforcement) Rules, 2002.
| Provision | Covers | Statutory timeline |
|---|---|---|
| Section 13(2) | Demand notice to a borrower whose account is classified as a non-performing asset | 60 days to discharge liabilities in full |
| Section 13(3A) | Secured creditor's reasoned reply to a borrower's representation or objection | 15 days from receipt |
| Section 13(4) | Measures on default — possession, management, assignment or sale of the secured asset | On expiry of the 60-day notice period |
| Section 14 | Assistance of the District Magistrate or Chief Metropolitan Magistrate to take possession | Order within 30 days, extendable to 60 days in aggregate |
| Section 17 | Application by an aggrieved person to the Debts Recovery Tribunal | 45 days from the date the measure was taken |
| Rule 8(5) | Valuation by an approved valuer and fixing of the reserve price before sale | Before the sale is effected |
| Rule 9(1) | Public notice of sale of immovable property | Sale not before 30 days from the notice |
Where the Act does not reach
Assessed before anything is issued.
Section 31 places categories of security outside the Act altogether. Establishing that a matter is inside it is the first thing we check.
- Agricultural landSecurity interest created in agricultural land is excluded.
- Facilities up to ₹1 lakhSecurity securing repayment of a financial asset not exceeding one lakh rupees.
- Where under 20% remains dueCases in which the amount due is less than twenty per cent of the principal amount and interest.
- Unsecured exposureThe Act operates on security interests; where none was created, it does not apply.
This page is general information about the statutory framework, not legal advice, and does not create a lawyer–client relationship. Timelines and procedure should be confirmed against the current text of the Act and the rules for any specific matter. See our terms of service.
Next step
Discuss a secured
asset portfolio.
Tell us the stage your matters have reached and the jurisdictions involved.