The lender’s right to the term “Hypothecation of assets” was not defined anywhere in the statute till the SARFAESI ordinance 2002. Some courts have even compared ‘hypothecation to a mortgage of movables’. Hypothecation occurs when an asset is offered by the borrower to the lender as prime or collateral to secure a loan/credit limit without…
RBI on Monday asked all the Regulated Entities (REs) of the Reserve Bank to display information on secured assets possessed under the SARFAESI Act, 2002. “As a part of the move towards greater transparency, it has been decided that the Regulated Entities (REs) of the Reserve Bank which are secured creditors as per the Securitisation…
Originally posted on July 22, 2014, and updated on 15, March 2023 Generally speaking, a lien (positive lien) is merely a right of a person to retain a property that is in his possession but belongs to another person till such time the debt or other obligation (for which such lien is conferred) is discharged.…
The main concern of a bank is that security available to it should be good enough to fall back upon, in the event of adverse circumstances. The role of loan documentation in the bank is to establish a legal relationship between the lender and the borrower when the dispute goes to a court of law.…
(This article explains how the actional claim, bailment, charge creation, hypothecation, lien, right of set-off, pledge, assignment, Trust receipt, etc. establish the right to recover from the specified assets of the borrower.) The charge creation means the establishment of the lender’s right to recover from the specified assets of the borrower, in case the recovery…
(This article gives the details like rights of secured creditors, Application of mind and care is required in the service of notice of SARFAESI DEMAND NOTICE, POSSESSION NOTICE & SALE NOTICE, Special care to be taken while taking possession of movable properties, method of sale of secured property by way of inviting tenders from the public or by…
As per the current guidelines, Securitisation is allowed only in the case of standard assets while lenders have to largely rely on Asset Reconstruction Companies (ARCs) for bad assets. Based on market feedback, stakeholder consultations, and the recommendations of the Task Force on Development of Secondary Market for Corporate Loans, RBI decided to introduce a…
Updated till 24.01.2020: Section 17 to Section 19 of the 2016 Act have been notified on December 26, 2019, by the Ministry of Finance in the official gazette (“SARFAESI Amendments”) and come into effect from January 24, 2020. In accordance with Sections 17 to Section 19 of 2016, inter alia Section 23 has been amended…
A bankruptcy remote entity is a special-purpose vehicle (“SPV”) that is formed to hold a defined group of assets and to protect them from being administered as property of a bankruptcy estate. The corporate documents of bankruptcy remote like memorandum association and article association may also attempt to create disablements to a bankruptcy filing. For…
A Power of attorney (POA) is a written instruction by which one person is empowered to act on behalf of another. That is to say, to do any lawful act or series of lawful acts on behalf of the principal person by his agent. The Power of Attorney can be made in two types, special…