SARFAESI, 2002 – The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 is an Indian law. Under this, banks and other financial institutions can auction the Security Interest created in residential/commercial properties (of Defaulter) to recover loans. It does not apply to unsecured loans, loans below ₹100,000, or the remaining debt below 20% of the original principal. Allows creation of asset reconstruction companies (ARC). Also, allowed banks to sell their non-performing assets to ARC’s. Banks are allowed to take possession of collateral property and sell it without court permission. In Mardia Chemicals Ltd. v. ICICI Bank, on 8 April 2004, the Supreme Court declared SARFAESI Act to be constitutionally valid.
RDDBFI– The Recovery Of Debts Due To Banks And Financial Institution Act, 1993. It applies to the whole of India except J&K. It applies where the amount of debt due is not less than Rs. 10,00,000/-. Original Application for recovery of Debts can be filed only by Banks and Financial Institutions.
The DRT has many powers vested with them such as summoning and enforcing the attendance of any person and examining them on oath, requiring the discovery and production of documents, receiving evidence on affidavits, issuing commissions for the examination of witnesses or documents, reviewing its decisions, dismissing an application for default or deciding it ex-parte, direct the defendants to provide security sufficient to satisfy the debt, and many others.