Economics • Banking & FinanceMedium
What is the primary operational objective of the 'Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002'?
A. To regulate digital payment gateways and retail financial transactions
B. To empower banks and financial institutions to recover non-performing assets without court intervention✓ Correct Answer
C. To provide mandatory credit insurance for micro-entrepreneurs
D. To regulate the capital adequacy norms of cooperative rural banks
💡 Solution & Explanation
The SARFAESI Act of 2002 was enacted to regulate the securitization and reconstruction of financial assets and to allow secured creditors to enforce security interests without court intervention. This legislation empowers banks and financial institutions to seize and auction commercial or residential properties pledged as collateral to recover dues from non-performing assets swiftly. It bypasses lengthy civil court litigations to improve the recovery climate for Indian lenders.
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