Economics • Banking & FinanceMedium
What is the key objective of the 'Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002'?
A. To nationalize failing cooperative banks
B. To enable banks and financial institutions to auction residential or commercial properties pledged as collateral without court intervention✓ Correct Answer
C. To regulate foreign direct investment in retail banking
D. To establish asset reconstruction companies managed directly by the Ministry of Finance
💡 Solution & Explanation
The SARFAESI Act of 2002 enables banks and financial institutions to recover non-performing assets by seizing and auctioning pledged collateral without court intervention. It applies strictly to secured debts where security interest has been created. The legislation significantly reduced judicial delays in debt recovery for Indian banks.
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