1. Short title, extent and commencement.—(1) This Act may be called the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
(2) It extends to the whole of India.
(3) It shall be deemed to have come into force on the 21st day of June, 2002.
2. Definitions.—(1) In this Act, unless the context otherwise requires,—
(a) “Appellate Tribunal” means a Debts Recovery Appellate Tribunal established under
sub-section (1) of section 8 of the Recovery of Debts Due to Banks and Financial Institutions
Act, 1993 (51 of 1993);
(b) “asset reconstruction” means acquisition by any 2
[asset reconstruction company] of any right
or interest of any bank or financial institution in any financial assistance for the purpose of realisation
of such financial assistance;
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[(ba) “asset reconstruction company” means a company registered with Reserve Bank under
section 3 for the purposes of carrying on the business of asset reconstruction or securitisation, or
both;]
(c) “bank” means—
(i) a banking company; or
(ii) a corresponding new bank; or
(iii) the State Bank of India; or
(iv) a subsidiary bank; or
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[(iva) a multi-State co-operative bank; or]
(v) such other bank which the Central Government may, by notification, specify for the
purposes of this Act;
(d) “banking company” shall have the meaning assigned to it in clause (c) of section 5 of the
Banking Regulation Act, 1949 (10 of 1949);
1. Subs. by Act 44 of 2016, s. 2, for the long title (w.e.f. 1-9-2016).
2. Subs. by s. 3, ibid., for “securitisation company or reconstruction company” (w.e.f. 1-9-2016).
3. Ins. by s. 4, ibid. (w.e.f. 1-9-2016).
4. Ins. by Act 1 of 2013, s. 2 (w.e.f. 15-1-2013).
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(e) “Board” means the Securities and Exchange Board of India established under section 3 of the
Securities and Exchange Board of India Act, 1992 (15 of 1992);
(f) “borrower” means 1
[any person who, or a pooled investment vehicle as defined in clause (da)
of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956) which,] has been granted
financial assistance by any bank or financial institution or who has given any guarantee or created any
mortgage or pledge as security for the financial assistance granted by any bank or financial institution
2
[and includes a person who, or a pooled investment vehicle which,] becomes borrower of a 3
[asset
reconstruction company] consequent upon acquisition by it of any rights or interest of any bank or
financial institution in relation to such financial assistance 4
[or who has raised funds through issue of
debt securities];
(g) “Central Registry” means the registry set up or cause to be set up under sub-section (1) of
section 20;
4
[(ga) “company” means a company as defined in clause (20) of section 2 of the Companies
Act, 2013 (18 of 2013);]
(h) “corresponding new bank” shall have the meaning assigned to it in clause (da) of section 5 of
the Banking Regulation Act, 1949 (10 of 1949);
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[(ha) “debt” shall have the meaning assigned to it in clause (g) of section 2 of the Recovery of
Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) and includes—
(i) unpaid portion of the purchase price of any tangible asset given on hire or financial lease
or conditional sale or under any other contract;
(ii) any right, title or interest on any intangible asset or licence or assignment of such
intangible asset, which secures the obligation to pay any unpaid portion of the purchase price of
such intangible asset or an obligation incurred or credit otherwise extended to enable any
borrower to acquire the intangible asset or obtain licence of such asset;]
(i) “Debts Recovery Tribunal” means the Tribunal established under sub-section (1) of section 3
of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (51 of 1993);
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[(ia) “debt securities” means debt securities listed in accordance with the regulations made by
the Board under the Securities and Exchange Board of India Act,1992 (15 of 1992);]
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[(j) “default” means—
(i) non-payment of any debt or any other amount payable by the borrower to any secured
creditor consequent upon which the account of such borrower is classified as non-performing
asset in the books of account of the secured creditor; or
(ii) non-payment of any debt or any other amount payable by the borrower with respect to
debt securities after notice of ninety days demanding payment of dues served upon such borrower
by the debenture trustee or any other authority in whose favour security interest is created for the
benefit of holders of such debt securities;]
1. Subs. by Act 13 of 2021, s. 162, for “any person who” (w.e.f. 1-4-2021).
2. Subs. by s. 162, ibid., for “and includes a person who” (w.e.f. 1-4-2021).
3. Subs. by Act 44 of 2016, s. 3, for “securitisation company or reconstruction company” (w.e.f. 1-9-2016).
4. Ins. by s. 4, ibid. (w.e.f. 1-9-2016).
5. Subs. by s. 4, ibid., for clause (ha) (w.e.f. 1-9-2016).
6. Subs. by s. 4, ibid., for clause (j) (w.e.f. 1-9-2016).
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(k) “financial assistance” means any loan or advance granted or any debentures or bonds
subscribed or any guarantees given or letters of credit established or any other credit facility extended
by any bank or financial institution 1
[including funds provided for the purpose of acquisition of any
tangible asset on hire or financial lease or conditional sale or under any other contract or obtaining
assignment or licence of any intangible asset or purchase of debt securities;]
(l) “financial asset” means debt or receivables and includes—
(i) a claim to any debt or receivables or part thereof, whether secured or unsecured; or
(ii) any debt or receivables secured by, mortgage of, or charge on, immovable property; or
(iii) a mortgage, charge, hypothecation or pledge of movable property; or
(iv) any right or interest in the security, whether full or part underlying such debt or
receivables; or
(v) any beneficial interest in property, whether movable or immovable, or in such debt,
receivables, whether such interest is existing, future, accruing, conditional or contingent; or
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[(va) any beneficial right, title or interest in any tangible asset given on hire or financial lease
or conditional sale or under any other contract which secures the obligation to pay any unpaid
portion of the purchase price of such asset or an obligation incurred or credit otherwise provided
to enable the borrower to acquire such tangible asset; or
(vb) any right, title or interest on any intangible asset or licence or assignment of such
intangible asset, which secures the obligation to pay any unpaid portion of the purchase price of
such intangible asset or an obligation incurred or credit otherwise extended to enable the
borrower to acquire such intangible asset or obtain licence of the intangible asset; or]
(vi) any financial assistance;
(m) “financial institution” means—
(i) a public financial institution within the meaning of section 4A of the Companies Act, 1956
(1 of 1956);
(ii) any institution specified by the Central Government under sub-clause (ii) of clause (h) of
section 2 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993
(51 of 1993);
(iii) the International Finance Corporation established under the International Finance
Corporation (Status, Immunities and Privileges) Act, 1958 (42 of 1958);
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[(iiia) a debenture trustee registered with the Board and appointed for secured debt
securities;
(iiib) asset reconstruction company, whether acting as such or managing a trust created for
the purpose of securitisation or asset reconstruction, as the case may be;]
(iv) any other institution or non-banking financial company as defined in clause (f) of
section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934), which the Central Government
may, by notification, specify as financial institution for the purposes of this Act;
1
[(ma) “financial lease” means a lease under any lease agreement of tangible asset, other than
negotiable instrument or negotiable document, for transfer of lessor's right therein to the lessee for a
1. Ins. by Act 44 of 2016, s. 4 (w.e.f. 1-9-2016).
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certain time in consideration of payment of agreed amount periodically and where the lessee becomes
the owner of the such assets at the expiry of the term of lease or on payment of the agreed residual
amount, as the case may be;]
(n) “hypothecation” means a charge in or upon any movable property, existing or future, created
by a borrower in favour of a secured creditor without delivery of possession of the movable property
to such creditor, as a security for financial assistance and includes floating charge and crystallisation
of such charge into fixed charge on movable property;
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[(na) “negotiable document” means a document, which embodies a right to delivery of tangible
assets and satisfies the requirements for negotiability under any law for the time being in force
including warehouse receipt and bill of lading;]
(o) “non-performing asset” means an asset or account of a borrower, which has been classified by
a bank or financial institution as sub-standard, 2
[doubtful or loss asset,—
(a) in case such bank or financial institution is administered or regulated by any authority or
body established, constituted or appointed by any law for the time being in force, in accordance
with the directions or guidelines relating to assets classifications issued by such authority or
body;
(b) in any other case, in accordance with the directions or guidelines relating to assets
classifications issued by the Reserve Bank];
(p) “notification” means a notification published in the Official Gazette;
(q) “obligor” means a person liable to the originator, whether under a contract or otherwise, to
pay a financial asset or to discharge any obligation in respect of a financial asset, whether existing,
future, conditional or contingent and includes the borrower;
(r) “originator” means the owner of a financial asset which is acquired by a 3
[asset reconstruction
company] for the purpose of securitisation or asset reconstruction;
(s) “prescribed” means prescribed by rules made under this Act;
(t) “property” means—
(i) immovable property;
(ii) movable property;
(iii) any debt or any right to receive payment of money, whether secured or unsecured;
(iv) receivables, whether existing or future;
(v) intangible assets, being know-how, patent, copyright, trade mark, licence, franchise or any
other business or commercial right of similar nature1
[as may be prescribed by the Central
Government in consultation with Reserve Bank];
(u) “
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[qualified buyer]” means a financial institution, insurance company, bank, state
financial corporation, state industrial development corporation, 2
[trustee or 3
[asset reconstruction
company] which has been granted a certificate of registration under sub-section (4) of section 3 or
any asset management company making investment on behalf of mutual fund] or a foreign
institutional investor registered under the Securities and Exchange Board of India Act, 1992
(15 of 1992) or regulations made thereunder,1
[any category of non-institutional investors as may
1. Ins. by Act 44 of 2016, s. 4 (w.e.f. 1-9-2016).
2. Subs. by Act 30 of 2004, s. 2, for certain words (w.e.f. 11-11-2004).
3. Subs. by Act 44 of 2016, s. 3, for “securitisation company or reconstruction company” (w.e.f. 1-9-2016).
4. Subs. by s. 3, ibid., for “qualified institutional buyer” (w.e.f. 1-9-2016).
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be specified by the Reserve Bank under sub-section (1) of section 7] or any other body corporate
as may be specified by the Board;
1* * * * *
(w) “Registrar of Companies” means the Registrar defined in clause (40) of section 2 of the
Companies Act, 1956 (1 of 1956);
(x) “Reserve Bank” means the Reserve Bank of India constituted under section 3 of the Reserve
Bank of India Act, 1934 (2 of 1934);
(y) “scheme” means a scheme inviting subscription to security receipts proposed to be issued by a
2
[asset reconstruction company] under that scheme;
(z) “securitisation” means acquisition of financial assets by any 2
[asset reconstruction company]
from any originator, whether by raising of funds by such 2
[asset reconstruction company] from
3
[qualified buyers] by issue of security receipts representing undivided interest in such financial assets
or otherwise;
1* * * * *
(zb) “security agreement” means an agreement, instrument or any other document or arrangement
under which security interest is created in favour of the secured creditor including the creation of
mortgage by deposit of title deeds with the secured creditor;
(zc) “secured asset” means the property on which security interest is created;
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[(zd) “secured creditor” means—
(i) any bank or financial institution or any consortium or group of banks or financial
institutions holding any right, title or interest upon any tangible asset or intangible asset as
specified in clause (l);
(ii) debenture trustee appointed by any bank or financial institution; or
(iii) an asset reconstruction company whether acting as such or managing a trust set up by
such asset reconstruction company for the securitisation or reconstruction, as the case may be; or
(iv) debenture trustee registered with 5
[the Board and appointed] for secured debt
securities; or
(v) any other trustee holding securities on behalf of a bank or financial institution,
in whose favour security interest is created by any borrower for due repayment of any financial
assistance.]
(ze) “secured debt” means a debt which is secured by any security interest;
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[(zf) “security interest” means right, title or interest of any kind, other than those specified in
section 31, upon property created in favour of any secured creditor and includes—
(i) any mortgage, charge, hypothecation, assignment or any right, title or interest of any kind,
on tangible asset, retained by the secured creditor as an owner of the property, given on hire or
financial lease or conditional sale or under any other contract which secures the obligation to pay
any unpaid portion of the purchase price of the asset or an obligation incurred or credit provided
to enable the borrower to acquire the tangible asset; or
1. Omitted by Act 44 of 2016, s. 4 (w.e.f. 1-9-2016).
2. Subs. by s. 3, ibid., for “securitisation company or reconstruction company” (w.e.f. 1-9-2016).
3. Subs. by s. 3, ibid., for “qualified institutional buyers” (w.e.f. 1-9-2016).
4. Subs. by s. 4, ibid., for clause (zd) (w.e.f. 1-9-2016).
5. Subs. by Act 13 of 2021, s. 162, for “the Board appointed by any company” (w.e.f. 1-4-2021).
6. Subs. by Act 44 of 2016, s. 4, for clause (zf) (w.e.f. 1-9-2016).
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(ii) such right, title or interest in any intangible asset or assignment or licence of such
intangible asset which secures the obligation to pay any unpaid portion of the purchase price of
the intangible asset or the obligation incurred or any credit provided to enable the borrower to
acquire the intangible asset or licence of intangible asset;]
(zg) “security receipt” means a receipt or other security, issued by a 1
[asset reconstruction
company] to any 2
[qualified buyer] pursuant to a scheme, evidencing the purchase or acquisition by
the holder thereof, of an undivided right, title or interest in the financial asset involved in
securitisation;
(zh) “sponsor” means any person holding not less than ten per cent. of the paid-up equity capital
of a 1
[asset reconstruction company];
(zi) “State Bank of India” means the State Bank of India constituted under section 3 of the State
Bank of India Act, 1955 (23 of 1955);
(zj) “subsidiary bank” shall have the meaning assigned to it in clause (k) of section 2 of the State
Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959).
(2) Words and expressions used and not defined in this Act but defined in the Indian Contract Act,
1872 (9 of 1872) or the Transfer of Property Act, 1882 (4 of 1882) or the Companies Act, 1956
(1 of 1956) or the Securities and Exchange Board of India Act, 1992 (15 of 1992) shall have the same
meanings respectively assigned to them in those Acts.