The Provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) are applicable to secured creditors as defined by section 2(1)(zd) of the Act. In terms of the definition following categories of secured creditors are governed by the SARFAESI Act:
(ii) Financial Institutions
(iii) Debenture Trustee appointed by any bank or financial institution
(iv) Securitisation Company (SC) or Reconstruction Company (RC)
(v) Any other trustee holding securities on behalf of a bank or financial institution.
In terms of the definition of bank and financial institution contained in section 2(1)(c) and (m), the Central Government has powers to declare any other bank or financial institution as a bank or financial institution for the purposes of the provisions of the SARFAESI Act. In exercise of the above powers the Central Government has declared certain banks and housing finance companies as financial institutions for the purposes of the SARFAESI Act, by issue of Notifications as under:
a) Notification No.SO105(E) dated 28.01.2003 declaring Co-operative Bank as defined in clause (cci) of section 5 of the Banking regulation Act, 1949 as 'bank' for the purposes of SARFAESI Act.
b) Notification No.So.1282(E) dated 10.11.2003 declaring certain Housing Finance Companies registered under section 29A of the National Housing Bank Act, 1987, as 'financial institutions' for the purposes of SARFAESI Act.
c) Notification No.SO 1275(E) dated 30.10.2003 declaring Asian Development Bank as 'financial institution' for the purposes of SARFAESI Act.
d) Notification No.SO772(E) dated 17.05.2007 declaring Regional Rural Banks as defined in clause (f) of section 2 of the Regional Rural Banks Act, 1976 as 'bank' for the purposes of SARFAESI Act.
All such entities are secured creditors for the purposes of SARFAESI Act and are required to register security interest by way of mortgage by deposit of title deeds with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI). IN addition to debenture trustees referred to in the definition of secured creditors there are certain trustee companies holding securities on behalf of banks and financial institutions. Such trustee companies are also secured creditors for the purposes of the SARFAESI Act and are governed by the requirements of the Registration System.