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JAIIB CAIIB STUDY MATERAILS

Unit – 20 : Definitions at SARFAESI ACT, 2002

  1. Preamble – An act to regulate Securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto
  2. Appellate Tribunal – Any person aggrieved by the order passed by DRT can file an appeal to the authority called as Appellate Tribunal.
  • Asset Reconstruction –
  • Bank – All the banking companies, Nationalised banks, Cooperative banks and RRBs.
  • Board – SEBI under SEBI Act 1992.
  • Borrower – granted financial assistance, given guarantee, has
  • Central Registry – All the transactions of asset Securitisation, reconstruction as well as transactions of creating security interest will have to be registered with this authority.
  • Debt Recovery Tribunal – these tribunals deal with the cases of recovery of debts. Above Rs. 10 Lakh due to banks and financial institutions.
  • Default
  • Financial Assistance
  1. Financial Asset – a claim to any debt or receivables and includes :
    1. A claim to any debt or receivables or part thereof whether secured or unsecured, or
    2. Any debt or receivable secured by mortgage of or charge on immovable property or
    3. A mortgage, charge, hypothecation or pledge of moveable property, or
    4. Any right of interest in the security, whether full or part, securing debt, or
  2. Financial Institution
  3. Hypothecation
  4. Non-Performing Asset
  5. Originator
  6. Obligor – Borrower or any other person liable to pay to the bank
  7. Property
  1. Qualified Institutional Buyer
  2. Reconstruction Company
  • Scheme
  • Securitisation
  • Securitisation Company : The minimum capital requirement is Rs.200 Crore at the time of registration, and these companies are required to maintain minimum capital adequacy ratio of 15% of total asset acquired or Rs.100 crore whichever is less. It is company registered under companies act 1956 for the purpose of securitisation. The company also needs registration with RBI.
  • Security Agreement means an agreement, instrument or any other document under which security interest is created.
  • Secured Asset means property on which security interest is created. The powers given by SARFAESI Act for enforcement of securities are against secured assets only.
  • Secured Creditor
  • Secured Debt means a debt which is secured by any security interest.
  • Secured Interest – Any right, title and interest of any kind whatsoever upon the property created in favour of any secured creditor is called as secured Interest.
  1. Security Receipt
  2. Sponsor is a person holding not less than 10% of the paid up equity capital of securitisation company.
  3. When any bank or financial institutions creates a charge against property, with which authority the transaction will have to be registered under the SARFAESI Act, 2002 – With the Central Registry
  • When the provisions of SARFAESI Act, 2002 can be invoked for proceeding against the charged property – When there is default in repayment and the bank declares the account as NPA.
  • Acquisition of financial asset from the originator is the main function of securitisation company.
  • If the borrower does not pay within 60 days after notice by the secured creditor the creditor can take possession of the security.
  • Enforcement of SARFAESI Act only if security is not in possession of the bank and financial institution.

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