Banks have decided to follow Sarfaesi Act 2002 for recovering their loans, especially home loans, from defaulters and those who don’t repay loans on time. The act gives banks and the financial institutions have the power to auction or sell the mortgaged residential or the commercial property of the borrower in case of non-payment.
“This is because of the worrisome increase in the non-performing assets and the Reserve Bank of India's constant goading to keep NPAs under manageable limit,” a top official of Canara Bank said.
The Act works as an effective tool for recovery of loans and receiving positive response. Mr. Shiv Kumar, Managing Director, State of Bikaner and Jaipur, said deployment of the Sarfaesi Act was one of the last but effective recovery tools for banks.“But one should ensure proper repayment in home/property loans while remembering that a bank is also under obligation to recover the dues,” he said.
