The types of loans that are not covered under the SARFAESI Act.
-
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.
-
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.
-
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.
-
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.
-
Loans below a certain amountl are also exempt from the SARFAESI Act. The threshold amount is decided by each bank or financial institution and may vary. Typically, loans below Rs. 1 lakh are not covered under the SARFAESI Act.
Assets Excluded from SARFAESI Act, 2002 Does not extend its coverage to the following assets:
- Money or security issued under the Sale of Goods Act, 1930, or the Indian Contract Act, 1872.
- Assets subject to lease, hire-purchase, conditional sale, or any other contractual arrangement where no security interest has been established.
- Rights held by the unpaid seller under Section 47 of the Sale of Goods Act, 1930.
- Properties not susceptible to sale or attachment as per 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.
