Buying SARFAESI Assets – A Safe, Transparent And Reliable Investment

The SARFAESI Act, 2002 (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act) was introduced with the aim of empowering banks and financial institutions to recover their dues in a speedy, efficient, and transparent manner.

But what exactly are SARFAESI assets, and why should the public consider buying them? Let’s look into it.

What are SARFAESI Assets?

When a borrower fails to repay a loan for more than 90 days, the account becomes a Non-Performing Asset (NPA). At this stage, the bank issues a notice called demand notice containing the following details.

● The amount due

● How long the dues have been pending

● A 60 days time for the borrower to clear the dues and redeem the secured asset.

If the borrower still does not comply, the bank takes possession of the secured property under the SARFAESI Act, 2002, and the property will be attached and auctioned.

It will be duly intimated to the borrower and to the buyer/public that, on the issue of the sale notice there shall be no possibility for the borrower to redeem his asset. Hence he shall have no claims after the issue of sale notice.

Do auctioned property have brokers/intermediaries?

There is no such mandatory requirement to have a broker. Asset Reconstruction Companies enable banks to find potential buyers and vice-versa, adding more reliability to the buying process. The public can directly approach the bank or ARC. It is an easy and transparent mechanism that is reliable and trustworthy.

Why Buying SARFAESI Assets is Safe?

It is safe for the following reasons:

● Firstly, The bank has already done due diligence and has done title clearance only after which the loan amount was disbursed to the borrower. So no need to worry about Legal issues and claims in future.

● Secondly, the buyer is buying directly from the bank and not from an individual or third party. The accountability and responsibility of the bank encompasses the buyer with confidence and transparency.

● Lastly, The Supreme Court and High Courts have repeatedly held that banks are duty-bound to hand over vacant possession of the property to the buyer after issuing the sale certificate. Hence, there is Legal Protection.

Why isn't buying SARFAESI assets common nowadays?

Despite its safety and transparency, lack of awareness among the public is the main reason. Most people don't know. And most people are aware but are not aware of its reliability and hassle-free experience.

The main deterrence is the handover/vacant possession of the property. Many people fail to understand that it is the duty of the bank to handover the asset to the buyer after issuance of sale certificate. There are many judgments from supreme court and various high courts that banks are duty bound to hand over vacant possession of the asset. But there isn't much awareness among the public.

Conclusion – A Strong Investment Opportunity

Hence, buying SARFAESI assets directly from the bank is safe, reliable, transparent , trustworthy and the best investment option for smart buyers.

Source:  Interview By V.N. Maya, CGM (Legal), Indian Bank

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Disclaimer : The content in this blog is for informative purposes only. Expert opinion may be sought as your case and circumstances may be.