Economics • Banking & FinanceMedium
What is the core objective of the 'Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act' (SARFAESI Act, 2002)?
A. To enable banks and financial institutions to auction residential or commercial properties of defaulters without court intervention✓ Correct Answer
B. To regulate foreign direct investment in the Indian banking and insurance sectors
C. To provide deposit insurance coverage up to a specified limit for retail account holders
D. To govern the establishment of foreign bank branches and representative offices in India
💡 Solution & Explanation
The SARFAESI Act of 2002 empowers banks and financial institutions to recover non-performing assets by enforcing security interests and auctioning collateral without requiring court intervention. Other regulatory enactments govern areas like deposit insurance limits or foreign direct investment norms within the financial sector. This legislation fundamentally transformed debt recovery procedures for Indian commercial lenders.
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