RIGHTS OF DEBTOR UNDER SARFESI ACT, 2002

Abstract

To fight the menace of growing non-performing assets and on the basis of recommendations of Andhyarujina committee, SARFESI Act, 2002 was enacted. Many of legal experts believe that this act is draconian, devoid of the principal of natural justice and one-sided in nature. This act was enacted on the believe that the normal process of recovery of debts through courts is lengthy and time taken is not suited for recovery of such dues. For financial assistance rendered to the industries by the financial institutions, financial liquidity is essential failing which there is a blockade of large sums of amounts creating circumstances which retard the economic progress followed by a large number of other consequential ill effects. So, the Recovery of Debts Due to Banks and Financial Institutions Act was enacted in 1993 on the basis of recommendations of Narasimham Committee but as the figures show it also did not bring the desired results.  In the present day global economy it may be difficult to stick to old and conventional methods of financing and recovery of dues. So, the bank and the financial institutions cannot afford a delay in the recovery process. The bank and financial institutions cannot afford that a significant portion of the funds remains blocked in unproductive assets, the values of which keep deteriorating with the passage of time along with incurring substantial amounts of expenditure by way of legal. It is, therefore, justified that Banks and Financial Institutions should be given a stringent law with substantial power of recovery without any procedural Delay.