SC places Cooperative banks under SARFAESI Act

The Supreme Court of India recently pronounced its judgement that cooperative banks shall be placed under SARFAESI Act.

Highlights

The Supreme court has upheld the GoI notification dated January 28, 2003 under which the cooperative societies have come under SARFAESI Act. The Apex court has also ruled that the Cooperative Banks have also come under the definition of banks under Banking Regulation Act, 1949.

The Court has also ruled that under Sarfaesi Act, the Parliament has powers to provide procedures for recovery of loans under the act.

Sarfaesi Act

Sarfaesi Act is Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. The banks utilize the act as tool to reciver bad loans, especially the non-performing assets.

The act provides procedures to transfer Non-Performing Assets for reconstruction of assets. It also enforces security interests of the banks without intervention of the court. In order to recover a debt, the act empowers the financial institutions in India to take over immovable property.

Month: Current Affairs - May, 2020