Understanding Section 24 SARFAESI ACT, 2002: Modification of Registered Security Interests
The Securitisation and Reconstruction of Economic Property and Enforcement of Protection Interest Act, 2002, normally called the SARFAESI Act, is a landmark legislation in India that gives a complete framework for managing non-appearing property (NPAs) in the banking area. Section 24 of the SARFAESI Act specifically deals with the modification of security interests registered under the Act.
Key Provisions of Section 24 of SARFAESI Act, 2002
1. Obligation to Report Modifications: Whenever any changes are made to the terms, conditions, extent, or operation of a security interest registered under the SARFAESI Act, the Securitization Company, Reconstruction Company, or secured creditors, as applicable, are obligated to notify the Central Registrar of such modifications.
2. Applicability of Registration Process: The provisions of the SARFAESI Act governing the registration of security interests are equally applicable to the modification of such registered security interests. This ensures transparency and maintains a comprehensive record of all security arrangements.
3. Timeframe for Reporting: The Act mandates that the particulars of any modifications to a registered security interest must be promptly communicated to the Central Registrar. This ensures that the record of security interests remains up-to-date and accurate.
Importance of Section 24 of SARFAESI Act, 2002
Section 24 plays a crucial role in maintaining the integrity and effectiveness of the SARFAESI Act's framework for dealing with NPAs. By requiring the reporting of modifications to registered security interests, the Act ensures that all relevant parties are aware of any changes to the secured creditor's rights and obligations. This transparency promotes fairness and protects the interests of all stakeholders.
Moreover, the applicability of the registration process to modifications ensures that the record of security interests remains comprehensive and accurate. This accurate record is essential for ensuring efficient enforcement of security interests and resolving disputes related to secured debts.
Conclusion
Section 24 of the SARFAESI Act, 2002, is a vital component of the Act's overall framework for dealing with NPAs. By mandating the reporting of modifications to registered security interests, the Act promotes transparency, protects the rights of all parties involved, and ensures the maintenance of an accurate record of secured debts. This provision contributes to the effectiveness of the SARFAESI Act in addressing NPAs and safeguarding the financial stability of the banking sector
