Explained: What is the Sarfaesi Act, invoked against telecom provider GTL?
The Sarfaesi Act of 2002 was brought in to guard financial institutions against loan defaulters. To recover their bad debts, the banks under this law can take control of securities pledged against the loan, manage or sell them to recover dues without court intervention
The Act has come into being to guard financial institutions against loan defaulters. (Photo via Reuters/Adnan Abidi) Banks have invoked the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act against telecom infrastructure provider GTL to recover their pending dues.
The recovery action has been initiated by IDBI Bank on behalf of lenders, whose total exposure to GTL stood at Rs 7,250 crore as of December 31, 2021, a report in The Financial Express said.
What is the Sarfaesi Act?
The Sarfaesi Act of 2002 was brought in to guard financial institutions against loan defaulters. To recover their bad debts, the banks under this law can take control of securities pledged against the loan, manage or sell them to recover dues without court intervention. The law is applicable throughout the country and covers all assets, movable or immovable, promised as security to the lender.
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