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SARFAESI Act is not applicable to which type of loan

Feb 23 2023

The types of loans that are not covered under the SARFAESI Act.

  1. Personal loans are unsecured loans, which means that they are not backed by any collateral. The SARFAESI Act is only applicable to loans that are secured by collateral such as property, stocks, or bonds. Therefore, personal loans are not covered under the SARFAESI Act.

  2. Credit card debt is also unsecured debt, and therefore, not covered under the SARFAESI Act. However, credit card companies can still take legal action to recover their outstanding debt through other means.

  3. Educational loans are another type of unsecured loan and are not covered under the SARFAESI Act. However, banks and financial institutions can still take legal action to recover the outstanding debt.

  4. Agricultural loans are also exempt from the SARFAESI Act. The reason for this exemption is to protect the interest of farmers, who may not have sufficient assets to offer as collateral. Instead, agricultural loans are covered under the Reserve Bank of India's Debt Relief Scheme.

Sarfaesi act is not applicable for loans outstanding upto rs?

  1. The SARFAESI Act applies to loans above Rs. 1 lakh that are classified as Non-Performing Assets (NPAs). However, it does not cover the following:

  2. NPA loan accounts with outstanding amounts less than 20% of the principal and interest.
  3. Money or securities issued under the Indian Contract Act, 1872, or the Sale of Goods Act, 1930.
  4. Rights of the unpaid seller as per Section 47 of the Sale of Goods Act, 1930.
  5. Conditional hire-purchase, sale, lease, or contracts where no security interest is created.
  6. Properties exempt from attachment or sale under Section 60 of the Code of Civil Procedure, 1908.

In conclusion, the SARFAESI Act is not applicable to all types of loans. Personal loans, credit card debt, educational loans, agricultural loans, and loans below a certain amount are exempt from the act. It is important to understand which loans are covered under the SARFAESI Act to avoid any confusion or legal issues in the future.