Professional Legal Services under SARFAESI Act | VrinLegal
At VrinLegal, we deliver strategic, dependable and professional legal services for matters related to the Sarfaesi Act and the securitisation and reconstruction of assets in India. Our legal professionals support banks, financial institutions, and borrowers in managing non-performing assets (NPAs), with the assurance of compliance, protection, and results.
What is SARFAESI Act ?
SARFAESI Act means Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, and it is a law passed in 2002, it o allows collecting bank and financial institution enforce security interest without having to go court. the law was created to combat the increasing problem of NPAs (non-performing assets) in India, by granting lenders the right to take possession of the secured assets or to ignore the secured assets all together to recover dues.
The primary goals of the Sarfaesi Act are as follows:
Facilitation of the securitization and reconstruction of financial assets,Empowerment for secured creditors to enforce a security interest in a limited timeframe.
Guidance for Asset Reconstruction Companies (ARCs).
Relief for courts to allow an out-of-court enforcement basis,Scope and Applicability of the SARFAESI Act.
The SARFAESI Act applies to all secured creditors, namely:
1. Banks
2. Financial institutions
3. Asset reconstruction companies
NBFCs (based on asset size and net worth as specified by the RBI
This Act will not apply to:
Agricultural land
Loans under ₹1 lakh
Security interests in aircrafts, ships, or hire-purchase agreements
At VrinLegal, we assist our clients on eligibility, exemptions and either enforcing or defending when instructed under the Sarfaesi Act to ensure lawful processes are followed throughout.
Securitization and Reconstruction of Financial Assets
Understanding Securitization
In finance, securitization is the process by which an entity converts their illiquid assets (like loans) into tradable market securities. By law in the Sarfaesi Act financial assets can be moved to Asset Reconstruction Companies (ARCs) to collect=social obligations on the debt, or restructuring loans.
Role of Asset Reconstruction Companies(ARCs)
ARCs buy NPAs from banks and Financial Institutions, and also undertake:
Restructuring loans
Management of borrower’s asset
Sale or lease of secured property
Conversion of debts into equity
All of these activities involve aspects of asset backed lender finance and assets reconstruction to allow lenders to reduce losses and improve liquidity.
Mechanisms of reconstruction
Some common mechanism for reconstruction of financial assets are:
Settlement or rescheduling of debts,Change of management of the borrowers business,
Sale or lease of part of the business,Apprehension of security without going to court.At VrinLegal our lawyers assist stakeholders in preparing agreements, sending notices and ensuring compliance with legal requirements in asset backed lending and reconstruction.
Legal Recourses Available Under the SARFAESI Act
The Sarfaesi Act lays down the detailed procedure for the enforcement of a security interest:
Section 13 proceedings
Section 13(2): Borrower is given a 60-day demand notice for repayment.
Section 13(4): If the repayment is not made, lenders can either take possession of the asset, take over management of the asset, and appoint an agent to manage the secured asset.
Appeals and DRT proceedings
Borrowers can file an appeal at the Debt Recovery Tribunal (DRT) under Section 17.
Borrowers can file further appeal before Debt Recovery Appellate Tribunal (DRAT).
At VrinLegal we move to represent both lenders and borrowers before the DRTs and DRATs. When we advocate cases, we ensure that the lender and borrower are fiercely, prepared for battle based on a sound and well thought out legal strategy based on our assessment of the Sarfaesi Act.
Borrower Rights and Defenses
The Sarfaesi Act empowers banks, but banks must ensure chose borrowers rights are protected:
Right to be heard before being dispossessed,Right to file objections to the demand notice,Right to appeal to the DRT,Right to claim damages for illegal possession.if applicable,Our lawyers assist borrowers, by challenging unlawful proceedings and protecting your interest, in accordance with the law.
Why VrinLegal for SARFAESI Act Matters?
Legal Knowledge
We understand the Sarfaesi Act inside and out and have knowledge about its said rules, allowing us to be at the forefront of giving advice to banks, NBFCs, ARCs, and borrowers.
End-to-End Legal Services
We provide end-to-end legal support - from drafting notice, documentation, representing before DRTs, securitization and reconstruction of financial assets.
Strategic Dispute Resolution
We support you in resolving disputes, either through well-reasoned negotiations or litigation if absolutely necessary. We help you to protect your financial interest and avoid unnecessary engagement in the legal process.
In accordance, we provide the following services:
Legal advice under the Sarfaesi Act
Representation before DRT and DRAT
Legal support for securitization and reconstruction of financial assets
Due diligence and documentation
Borrower/lender defence and possession of assets
Be Compliant with VrinLegal
If recovery proceedings are not compliant with the processes under the Sarfaesi Act, non-compliance could void the recovery proceedings. No matter whether you are a bank recovering secured debt, or a borrower defending his/her rights, you need experienced legal support.
VrinLegal will offer structured, lawful, and outcome-oriented legal services to manage NPAs and enforce rights organized under the Act, or simply defend actions organized under the Act.
Contact Us for SARFAESI Legal Service
If you are involved in any legal issue or SARFAESI actions since or requiring assistance with securitization and reconstruction of financial assets, you should contact our skilled legal team today!
📞 Call Now: +91-9899425214
📧 Email: contact@vrinlegal.com
🌐 Website: https://vrinlegal.com
Be legally safe! VrinLegal: your viably compliance partner for SARFAESI legal-based issues.