SC places Cooperative banks under SARFAESI Act

SC places Cooperative banks under SARFAESI Act

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SC places Cooperative banks under SARFAESI Act

The Supreme Court of India recently pronounced its judgement that cooperative banks shall be placed under SARFAESI Act.

Notable Points

  • The Supreme court has upheld the GoI notification dated January 28, 2003 under which the cooperative societies have come under SARFAESI Act.
  • The Apex court has also ruled that the Cooperative Banks have also come under the definition of banks under Banking Regulation Act, 1949.
  • The Court has also ruled that under Sarfaesi Act, the Parliament has powers to provide procedures for recovery of loans under the act.

Sarfaesi Act

  • Sarfaesi Act is Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act.
  • The banks utilize the act as tool to reciver bad loans, especially the non-performing assets.
  • The act provides procedures to transfer Non-Performing Assets for reconstruction of assets.
  • It also enforces security interests of the banks without 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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