scorecardresearchRBI tells banks to name borrowers whose assets are possessed under Sarfaesi

RBI tells banks to name borrowers whose assets are possessed under Sarfaesi Act

Updated: 26 Sep 2023, 01:18 PM IST
TL;DR.

The RBI notification says the REs will upload this information on their website in the format shared by the RBI.

The first such list shall be displayed on the website of REs within six months

The first such list shall be displayed on the website of REs within six months

The Reserve Bank of India (RBI) has announced that the Regulated Entities (REs) that are secured creditors as per the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, will display information in respect of the borrowers.

The SARFAESI Act is a law that allows banks and financial institutions to recover bad loans effectively. The bank can recover the loan by taking possession of the security and selling it to recover the dues.

The RBI notification says the REs will upload this information on their website in the format shared by the RBI.

The first such list shall be displayed on the website of REs within six months from the date of this circular, and the list shall be updated on a monthly basis.

The information that the banks are supposed to share include borrower name, guarantor name, borrower's address, guarantor's address, outstanding amount, asset classification, date of asset classification, details of security possessed and name of the title holder of the security possessed.

Recently, the banking regulator also released the master direction on wilful defaulters.

The RBI broadened the definition of wilful default, and called for a review by the bank within six months of an account being declared as a non performing asset (NPA).

A wilful default would be considered to have occurred when a borrower took the money, has the means to repay but has still defaulted.

These guidelines were recently revised after the banking regulator reviewed the orders and judgements of constitutional courts and representations from banks and stakeholders.

 

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First Published: 26 Sep 2023, 01:18 PM IST