IMPORTANT STATUTORY & REGULATION PROVISIONS IN BANKING
Specially for Upcoming Bank Exams
The Secularization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI):
- In the event of default by a borrower, the bank have the powers to recover money from the debtor of the borrower;
- Take over the management of the business of the borrower;
- Take possession, sell or lease the secured assets;
- Appoint a Manager (not below Scale-IV Officers);
- Agri. Loans and where 80% recovery has been done are exempted.
- Loans outstanding of Rs.1lakh & above are covered by the Act.
- Under Section 13(2) of the Act, secured creditor has to serve 60 days’ notice before taking any of the provisions Under Section 13(4) of the Act.
- After service of notice if the borrower makes a representation or raises any objection, the secured creditor shall consider such deputation or objection and if the same is acceptable, the reasons of non-acceptance have to be communicated within one week of receipt.
Central Registry under SARFAESI Act, 2002 (CERSAI):
- Section 20 of the SARFAESI Act, 2002 provides for setting up of a Central Registry for the purpose of registration of transactions of secularization, asset reconstruction and security interest under the SARFAESI Act.
- Under Section 23 of the SARFAESI Act, particulars of any charge creating security interest over property is required to be filed with the Registry within 30 days from the date of creation.
- Section 27 of the SARFAESI Act provides that any default in filing the above mentioned transactions shall be punishable with fine which may extend to Rs.5000 for every day during which the default continues.
- Central Registry of Secularization, Asset Reconstruction and Security Interest of India (CERSAI), a Govt. Company, licensed under Section 25 of the Companies Act, 1956 has been disembodied.
- CERSAI has become activate from 31.3.2011.
- The Central Registrar may allow the filing of particulars of such transaction of security interest within 30 days next following the expiry of the said period of 30 days on payment of such additional fee not exceeding ten times the amount of such fee.
- Four Forms viz. Form-I, Form-II, Form-III and Form-IV have been prescribed for the purpose of filing particulars of transaction to be registered with the Central Registry.
- FORM-I – To be used for filing Particulars of Creation or Modification of Security Interest in favor of Secured Creditors
- Fee: For a loan up to Rs.5 lakh: Rs.250 for both creation and modification of security interest.
- For a loan above Rs.5.00 lakh: Rs.500 for creation and for any subsequent modification of security interest in favor of a secured creditor.
- FORM-II – This is to be used for filing content of any existing Security Interest Fee – Rs. 250.
- FORM-III – To be used for filing particulars of Secularization or Reconstruction of Financial Assets Fee – Rs.1000;
- FORM-IV – To be used for filing particulars of allowances of Secularization or Reconstruction transactions Fee – Rs.250;
- The particulars of any transaction kept in Central Registry are open for review to any person through the website of Central Registry during the business hours of the Central Registry on payment of fee of Rs.50.
- The particulars of every transaction reference to above shall have to be recorded with Central Registrar within a period of 30 days from the date of such transaction.
- In case of delay in filing, the Central Registrar may on an application being made stating the reasons for delay not exceeding 30 days, allow filing of particulars on payment of additional fees, as individualized in the SARFAESI (Central Registry) Rules.
Banking Ombudsman Scheme, 2006:
- As per Section 4, Reserve Bank of India (RBI) appoints one or more of its officers in the rank of Chief General Manager or General Manager to be known as Banking Ombudsman.
- The award is on indemnification, not more than actual loss suffered on account of the act of commission by the bank or Rs.10 lakh whichever is lower.
- In case Award is not adoptable, the party not accepting the award may refuge the appellate authority i.e. Deputy Governor of RBI within 30 days from the date of receipt of the award. The complainant has also the recourse before Court.
- Complaint may be permanent by agreement within a period of one month. In case it is not standing by agreement, Banking Ombudsman may pass an award by giving logicai opportunity to both sides.
- The complaint should be made before expiry of one year after the cause of action has arisen.
- If a complaint on deficiencies in banking services is not responded by the anxious Bank within one month or the reply has not content the complainant, the Banking Ombudsman whose jurisdiction covers the Bank Branch may be approached.
- Complaint can be filed by authorized delegate (other than an advocate) of the complainant.
- No fees are charged for resolving a complaint.
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