LoansFinancial Glossary
SARFAESI Act
Definition
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It allows banks and financial institutions to recover non-performing assets by seizing and selling the secured assets (property, equipment) without court intervention. A 60-day notice to the borrower is mandatory before enforcement.
Why It Matters
SARFAESI gives banks enormous power to recover secured loans. If you default on a home loan, the bank can send a SARFAESI notice, take possession of your property, and auction it — all without going to court. This makes secured loan defaults particularly risky for borrowers. If you receive a SARFAESI notice, seek legal counsel immediately and explore one-time settlement options.