One of the biggest issues that continues to stress the banking
sector as of date is the mounting number of non performing assets.
The federal legislation enacted in 2002, the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 ("SARFAESI Act") has
been in force for more than a decade. It was enacted with the
intent to help financial markets improve recovery by exercising
self-help powers to take possession of and enforce collateral. In
other words, to reduce non-performing assets by adopting measures
for recovery.
Some of the impediments in enforcing creditors rights have been
local laws/state level legislations as different from federal/union
laws. So what would be the outcome in such a situation? Will the
rights of the secured creditors continue to be protected or will
the state level legislations impact such rights? Will the federal
level legislation prevail or the state level legislation?
