Economics • Banking & FinanceMedium
What is the primary objective of the 'Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002'?
A. To nationalize private commercial banks facing liquidity crunches
B. To allow banks and financial institutions to auction residential or commercial properties of defaulters to recover loans without court intervention✓ Correct Answer
C. To establish rural regional banks across remote districts
D. To regulate foreign institutional investments in Indian stock markets
💡 Solution & Explanation
The SARFAESI Act of 2002 enables banks and financial institutions to enforce security interests and auction pledged assets of defaulting borrowers without intervention from civil courts to expedite recovery. It does not nationalize commercial banks or regulate foreign investments, which fall under separate legislative frameworks. Resolution of non-performing assets is a major theme in Indian economic policy.
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