MISUSE OF SARFAESI ACT 2002

Date:  18-08-2014                                                                                    By email

To, 

Director [BO-I, Recovery & OL]

Dept of Financial Services

MoF, Govt of India, New Delhi

dirrec-dfs@nic.in

                        Suggestion: Amendment to SARFAESI ACT 2002

             Section 31.h of The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 provides that this act will not be applicable to any security interest for securing repayment of any financial asset not exceeding one lakh rupees.

            I am witness to a high handed approach of officers of a Public Sector Bank in 2007, where under the above act, a sound service provider availing housing loan of Rs.300000/- and sound service instrument loan of Rs.80000/-, was thrown out of  his flat for an overdue amount of nearly Rs.2500/- . He and his wife with two minor sons were kept out on road for 365 days without business, as sound service instruments [mikes, loudspeakers etc] too were locked in the flat with all house hold articles not financed by bank. The family, 15 year old business and education of two sons were ruined, while banks are mandated to alleviate poverty. This atrocity was inflicted as he did not repeatedly entertain 4 officers of rural branch and zonal office, Rajkot at week-ends with liquor and non-veg – one type of corruption in kind. The officers took disadvantage of his semi-literacy and lack of English knowledge. CMD of the Bank also did not intervene, when approached.

           

            Thus small borrowers are subjected to inhuman recovery process under this act. It is possible that this act may be being misused for extraneous consideration by bank officers in other cases of small borrowers. Big borrowers have battery of advocates to guide them how to ditch the act or middlemen to manipulate bank  officers to avoid effective action for recovery.

            To avoid such horrible misuse, I humbly suggest that amount of one lakh rupees in said section be replaced by five lakh rupees at least. In fact borrowers with loan up to Rs.5.00 lakhs are normally small self-employed entrepreneurs. They must be kept out of clutches of Securitization Act wherein bank officers act like private money lenders or even worst.

            This suggestion is also in tandem with genuine pro-common citizen policy of new BJP govt at Delhi. I hope you will push for such an amendment as part of weeding out obsolete anti-citizen laws and rules.

Yours faithfully,