The Act embraces three major aspects namely, securitisation, asset reconstruction and the enforcement of the security interests. The enforcement of the security has been made simple in the cases where there is incidence of continued default by the borrowers and their accounts have been classified as non-performing assets (NPA) in the books of banks/financial institutions which have provided the financial assistance. The present Act in a special legislation. It may go a long way in reducing the level of NPA. It is also likely to redefine the relationship of the borrower and the secured creditors. The Act may also help in keeping a check on the NPAs in future as well and will bring in new financial culture in the system. The Act is also meant to regulate the business of Securitisation and asset reconstruction. Securitisation is a new financial product for the Indian market. The provisions of the Act deal with the general methodology which will be adopted by the Securitisation companies to issue the security receipts/debentures to the qualified institutional buyers [QIB]. These receipts will be privately placed with them and there would not be any public issue. The next part of the Act deals with the asset reconstruction which inter-alia is not new to the Indian corporate sector. The Secured Creditors (Banks/FI) have been given wide powers for the purpose of the take-over of the assets or the management of the borrowers. The secured creditors can have recourse to either of these with a provision to sell these assets or take other actions for the purpose of the realisation of the financial assistance. This power is available with SFCs under section 29 of the SFC’s Act, 1951. It has been widely resorted to by the SFC’s. The Chapter III of the Act is a Major touchstone of the Act. It authorises the secured creditors to take over the assets or the management of the borrower company. It is expected that the book would be useful to the banks/financial institution, the financial consultants, legal practitioners and Company Secretaries.

More Details about Guide to Securitisation, Reconstruction of Financial Assets & Enforcement of Security Interest

General Information  
Author(s)Justice Banerjee
PublisherLexis Nexis
Publish YearJanuary 2003