BP · VIDEOLECTURE

SARFAESI PART 2, ARC, Lok Adalat, DRTs, Mortgages

Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for VIDEO LECTURES OF ASHISH SIR (FOR ALL SCALES) — Bank Promotions.

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What does SARFAESI stand for?

SARFAESI stands for Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. It empowers banks and financial institutions to recover non-performing assets without court intervention.

What is the minimum NPA age for a bank to sell an asset to an ARC?

NPA must be at least 2 years old before sale to ARC.

What is an Asset Reconstruction Company (ARC) under SARFAESI?

An ARC is a company registered with the RBI under SARFAESI Act that acquires stressed financial assets (NPAs) from banks and financial institutions at a negotiated price and attempts to recover them.

What is the cash reserve requirement for ARCs at the time of acquiring financial assets?

ARCs must pay at least 15% of acquisition cost in cash.

What is the minimum Net Owned Fund required for registration of an ARC with RBI?

An ARC must have a minimum Net Owned Fund (NOF) of Rs. 100 crore to obtain a Certificate of Registration from RBI under SARFAESI Act.

Under SARFAESI, what is the time limit for a borrower to reply to the 60-day notice?

Borrower must reply within 60 days of receiving the notice.

What percentage of security receipts must an ARC mandatorily invest in as per RBI guidelines?

An ARC must invest not less than 15% of each class of security receipts issued by it to ensure skin-in-the-game and align its interests with investors.

What is the maximum amount for which cases can be settled through Lok Adalat for pre-litigation bank cases?

Cases up to Rs. 20 lakh can be settled through Lok Adalat.

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