SARFAESI Act procedure, SARFAESI Act Flowchart

SARFAESI Act procedure, SARFAESI Act Flowchart

Start: Borrower defaults on loan repayment

1. Loan Classification:

• Is the loan classified as a Non-Performing Asset (NPA) by the secured creditor (bank)?
  • Yes: Proceed to Step 2
  • No: End flowchart, as SARFAESI Act is not applicable

2. Pre-Enforcement Measures:

• Does the loan meet the minimum threshold for SARFAESI action (as per current regulations)?
  • No: End flowchart, as SARFAESI Act is not applicable
  • Yes: Issue demand notice to borrower, specifying amount due and repayment timeline (Section 13(2) of the Act)

3. Borrower Response:

• Does the borrower repay the entire outstanding dues within the notice period?
  • Yes: End flowchart, debt recovered
  • No: Proceed to Step 4

4. Enforcement Measures:

• Secured Assets: Secured creditor can take one or more of the following actions (Section 13(4) of the Act):
  • Take possession of secured assets (e.g., property)
  • Sale of secured assets through public auction or private treaty
  • Lease or manage secured assets
  • Appoint receiver for managing secured assets
• Unsecured Assets: Secured creditor needs to file a civil suit for recovery through courts

5. Sale of Secured Assets:

• Advertise the sale of secured assets with details like reserve price, date, and location (Section 13(5) of the Act)
• Conduct public auction or private sale, following due process
• Recover dues from sale proceeds, following a specific order of priority for different claims

6. Outcome:

• If sale proceeds are sufficient, recover remaining dues and close the case.
• If sale proceeds are insufficient, pursue other avenues for recovery, potentially through legal action.

Note: This flowchart provides a simplified overview of the SARFAESI Act process. The actual process can involve additional steps and legal considerations. It is recommended to consult with a legal professional for specific guidance.

SARFAESI Act procedure, SARFAESI Act Flowchart

The SARFAESI Act (Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act) provides a framework for secured creditors to recover outstanding dues from defaulting borrowers. Here’s a simplified flowchart outlining the key steps involved in the SARFAESI Act process:

Start: Borrower defaults on loan repayment

1. Loan Classification:
   • Is the loan classified as a Non-Performing Asset (NPA) by the secured creditor (bank)?
     • Yes: Proceed to Step 2
     • No: End flowchart, as SARFAESI Act is not applicable
2. Pre-Enforcement Measures:
   • Does the loan meet the minimum threshold for SARFAESI action (as per current regulations)?
     • No: End flowchart, as SARFAESI Act is not applicable
     • Yes: Issue demand notice to borrower, specifying amount due and repayment timeline (Section 13(2) of the Act)
3. Borrower Response:
   • Does the borrower repay the entire outstanding dues within the notice period?
     • Yes: End flowchart, debt recovered
     • No: Proceed to Step 4
4. Enforcement Measures:
   • Secured Assets:
     • Secured creditor can take one or more of the following actions (Section 13(4) of the Act):
       • Take possession of secured assets (e.g., property)
       • Sale of secured assets through public auction or private treaty
       • Lease or manage secured assets
       • Appoint receiver for managing secured assets
   • Unsecured Assets:
     • Secured creditor needs to file a civil suit for recovery through courts
5. Sale of Secured Assets:
   • Advertise the sale of secured assets with details like reserve price, date, and location (Section 13(5) of the Act)
   • Conduct public auction or private sale, following due process
   • Recover dues from sale proceeds, following a specific order of priority for different claims
6. Outcome:
   • If sale proceeds are sufficient, recover remaining dues and close the case.
   • If sale proceeds are insufficient, pursue other avenues for recovery, potentially through legal action.

Note: This flowchart provides a simplified overview of the SARFAESI Act process. The actual process can involve additional steps and legal considerations. It is recommended to consult with a legal professional for specific guidance.