Lok Sabha Question No. 3556 (UNSTARRED), answered on 2019-07-15
Subject: Recovery under SARFAESI Act
Ministry: FINANCE
Asked by: M. K. Raghavan

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION NO. 3556

TO BE ANSWERED ON THE 15 TH  JULY, 2019 / 24 Ashadha, 1941 (SAKA)

## RECOVERY under SARFAESI Act

## QUESTION

Will the Minister of FINANCE be pleased to state:

- (a)  Whether  it  has  come  to  the  knowledge  of  the  Government  that  the  Banks  and Financial  Institutions  are  misusing  the  recovery  proceedings  under  SARFAESI  Act, whereby absurdly low price is fixed for the property of the borrowers;
- (b) if so, whether the Government has though of preventing this misuse by incorporating a provision by which the land value can be assessed by the concerned local Tehsildars or the Village Officers, if so, the details thereof;
- (c) whether the Government has also taken note of the fact that the Banks and Financial Institutions are taking a liberal approach towards the big loans where as drastic recovery proceedings are initiated against loans availed by the ordinary middle class people;
- (d)  if  so,  whether  the  Government  has  taken  note  of  the  Anti  Sarfaesi  movement garnering momentum in the country, if so, the details thereof; and
- (e)  the  corrective measures  taken/  proposed  to  be  taken  by  the  Government  to address these issues affecting the common people of the country?

## ANSWER

## The Minister of State in the Ministry of Finance (Shri Anurag Singh Thakur)

- (a) and (b ) The Central Government administers the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) which allows banks and financial institutions to recover their dues exceeding one lakh rupees by proceeding against secured assets of the borrower/guarantor without the intervention of  the  court/tribunals.  The  Government  is  not  involved  in  commercial  decisions  or recovery proceedings of banks or financial institutions. As such, to address any concerns about property valuation, there are adequate provisions under Rule 8 (5) of the Security

3556.   M K Raghavan

Interest  (Enforcement) Rules, 2002 under the SARFAESI Act, that   cast a duty on the Authorised  Officer  of  the  secured  creditor  (bank  or  financial  institution)  to  obtain  the valuation  of  the  property  from  an  approved  valuer  (as  defined  in  the  Rules)  and,  in consultation with the secured creditor, fix the reserve price of the property before putting the property on sale. Any aggrieved debtor/borrower has recourse to filing appeal in the Debts  Recovery  Tribunal  (DRT)  against  action  under  the  SARFAESI  Act  and  further recourse  to  appeal  against  the  DRT's  decision  is  available  in  the  Debts  Recovery Appellate Tribunal.

(c)  The SARFAESI Act does not differentiate between debtors/borrowers on any basis, including the financial status or debt value.

(d)  Does not arise, in view of (c) above.

(e) Substantive amendments were made in the SARFAESI Act on 14.8.2016 through the Enforcement  of  Security  Interest  and  Recovery  of  Debts  Laws  and  Miscellaneous Provisions (Amendment) Act, 2016, in consultation with stakeholders. At present there is no proposal to amend the SARFAESI Act or the Rules framed thereunder.

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