JAIIB LRAB 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.

3. Asset Reconstruction -

4. Bank – All the banking companies, Nationalised banks, Cooperative banks and RRBs

5. Board – SEBI under SEBI Act 1992.

6. Borrower – granted financial assistance, given guarantee, has

7. 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.

8. Debt Recovery Tribunal – these tribunals deal with the cases of recovery of debts. Above Rs. 10 Lakh due to banks and financial institutions.

9. Default

10. Financial Assistance

11. 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

12. Financial Institution

13. Hypothecation

14. Non-Performing Asset

15. Originator

16. Obligor – Borrower or any other person liable to pay to the bank

17. Property

18. Qualified Institutional Buyer

19. Reconstruction Company

20. Scheme

21. Securitisation

22. 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.

23. Security Agreement means an agreement, instrument or any other document under which security interest is created.

24. 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.

25. Secured Creditor

26. Secured Debt means a debt which is secured by any security interest.

27. 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.

28. Security Receipt

29. Sponsor is a person holding not less than 10% of the paid up equity capital of securitisation company.

1. 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

2. 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.

3. Acquisition of financial asset from the originator is the main function of securitisation company.

4. If the borrower does not pay within 60 days after notice by the secured creditor the creditor can take possession of the security.

5. Enforcement of SARFAESI Act only if security is not in possession of the bank and financial institution.