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.
- 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 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.