On 5 September, the government notified the majority of provisions amending the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). Certain provisions of the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016, came into force on 1 September. The notified provisions relate to the following:
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- The definition of “asset reconstruction company”, “company”, “debt securities”, “financial lease”, “negotiable document”, “property”, etc.
- The registration of securitization companies or reconstruction companies.
- The acquisition of rights or interest in financial assets and measures for asset reconstruction.
- The Reserve Bank of India’s powers to determine policy and issue directions, and to carry out audits, inspection and enforcement of security interest.
- The manner and effect of a management takeover and the right of a borrower to receive compensation and costs in certain cases.
- Central registry/registrar.
- The right of a borrower to receive compensation and costs and exemptions from registration of a security receipt.
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The business law digest is compiled by Nishith Desai Associates, a research-based international law firm with offices in Mumbai, New Delhi, Bangalore, Singapore, Silicon Valley and Munich. It specializes in strategic legal, regulatory and tax advice coupled with industry expertise in an integrated manner.
