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Abstract
Debt or asset securitization is one of the latest techniques which financial markets have been witnessing. Under asset securitization, a financial institution pools and packages individual loans and receivables, creates securities against them, get them rated and sells them to investors in a market. With a view to formalize the operations of the securitization market in India and to ensure financial discipline and control in respect of the rights and obligation of the players, the legislature passed SARFAESI Act, 2002 ( Securitization and Reconstruction of Financial assets and Enforcement of Security Interest Act ) which overrides previous Recovery of Debts due to Banks and Financial Institution Act, 1993 , which is used as an effective tool by banks for bad loans and NPA (Non-performing assets). It is only possible when such NPAs are backed by hypothecation, mortgage or assignment. It aims to regulate securitization and reconstruction of financial assets and enforcement of security interest. It is only effective in case of secured loans where banks can enforce underlying security and the only exception is agricultural land. Another feature of this act which removes intervention of Courts in this procedure makes it speedy and swift unless the security is invalid or fraudulent.