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Eligibility, Procedure & Action by Bank under Securitisation Act - 2002 (SRESI) - at a glance

THE SECURITISATION & RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 (SRESI)
As you are aware that the Securitisation & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SRESI) has been enacted for assistance to the bank and other financial institutions in the recovery of loans. Hereunder is a compilation of eligibility, procedure and action taken by Bank in respect of the above Act. The information contained therein should be taken as general guidance on various issues.

1. ELIGIBLE ACCOUNTS

* Non-Performing Accounts - Amount Rs. 1 Lac and above.
* The account must be secured by mortgage (not agricultural land), charge, hypothecation (not pledge), assignment of assets of borrower or guarantor.
* In pending cases, the BIFR/DRT/Civil Court, as the case may be, is to be informed suitably/simultaneously.

2. AUTHORIZED OFFICER
Chief Manager (SMGS-IV) and above of the Bank/Branch or in administrative office.
3. ISSUE OF NOTICE

* To be issued by authorized officer.
* To be given to borrower and guarantor when the property of borrower and guarantor or of guarantor alone is mortgaged, where guarantor has not mortgaged property then copy of notice is to be sent to guarantor.
* The service to be made by Regd. Post/A.D., Speed Post, Courier. In case of non-delivery service, the service is to be affected by affixing the notice on the conspicuous part of the building where the borrower/guarantor resides and it may also be published in two leading newspapers, one in vernacular language.

4. PROCEDURE AFTER ISSUE OF NOTICE
If the borrower/guarantor fails to meet their liability in full within 60 days from the notice then the authorised officer may by himself or through enforcement agency take one or more of the measures, i.e.,

* To take possession.
* To take over the management.
* To appoint manager.
* To issue notice for collection of receivable/Book Debts.
* If borrrower/guaranor seeks time and intends to compromise, the proposal should be submitted to competent authority provided 25% of the amount offered is deposited.
* For taking possession of secured assets, the authorized officer may take assistance of an outside enforcement agency or the Chief Metropolitan Magistrate or District Magistrate having jurisdiction over such assets.
* A panchnama should be drawn in the presence of at least two witnesses and sholuld also be signed by he witnesses.
* Until the assets are sold steps for preservation, protection and isurance etc. would be necessary.
* Valuation of secured assets taken into possession shall be arranged through approved valuers.
* The reserve price for the assets to be sold will be determined by the Sale Committee at the controlling office of the Bank/Branch.
* Possession Notice along with Inventory Report is to be given to the borrower/guarantor and in case of immovable property should also be published in two prominent newspapers of which one should be published in two prominent newspapers of which one should be in vernacular language having sufficient circulation in that locality.
* Borrower and guarantor is to be given notice of at least 30 days prior to arranging sale of the secured assets.
* The assets taken into possession may be sold to secure maximum price by either of the modes:

> By obtaining quotations from parties dealing in the secured assets.
> By inviting tenders from public.
> By holding public auction.
> By private treaty/contract.

* Upon confirmation of sale and after receipt of sale price, the authorized officer shall issue certificate of sale for movable/immovable assets.
* For recovery of balance due, if any, the Bank/Branch files an application to the DRT or other competent court within the limitation.
* After full recovery of the Bank's dues, if any excess amount is left over the same should be refunded to the borrower or the guarantor, as the case may be.


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