They can issue a notice of default to borrowers, asking them to clear their liabilities and dues within 60 days from the issue of notice.
These attached assets can then be managed by the bank or put up for sale or auction, without requiring any court intervention.
A company is declared will full defaulter after giving proper and sufficient windows vista recovery disk usb time to the company to explain its constraints.There is nothing specifically and directly provided in the Act that bars such directors from taking board positions or decisions or entering into financial dealings.Lenders may initiate criminal proceedings also.Let's take a look at the implications of this tag on an individual, in terms of the provisions of the Companies Act, 2013.Penal measures, banks are advised to send their list of willful defaulters.This act also provides for sale of these financial assets by banks.
The borrowers can remit their any time before the conclusion of the sale of their security and acquire their security back.
To qualify for action under the sarfaesi Act, the defaulted loan or advance should follow these pre-requisites : The banks or FIs should have thier outstanding dues above 1 lakh, which should also be more than 20 percent of the principal loan amount.
Legal process against willful defaulters will be initiated.
The, securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest or, sarfaesi Act, as it is popularly referred to as, is meant to empower banks and other financial institutions, to attach the secured assets ( that serves as security) of a loan defaulter.
The Act gives vast powers to the Banks and Financial Institutions dealing with Non-Performing Assets.The latest is RBI's master circular on wilful defaulters dated July.What this means is if a court doesn't accept a director's contention against the wilful defaulter tag, the provisions of fraud and punishment provided in the Act might come into effect.Asset Reconstruction Companies, also known as ARCs.This is aimed at preventing willful defaulters from accessing capital markets and borrowing from other banks and financial institutions.The questions based on this act appear in various banking recruitment exams, especially in the RBI and SBI interviews and group discussions as well.Legal experts say a new provision in the Act, under section 74, spells out the punishment for directors and officers who fail to repay "deposits" raised by the company.