NO PENALTY FOR DEFAULT
SARFAESI Act is silent on the issue
The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Act, 2002 ( SARFAESI), unfortunately, does not have any specific penal provisions against officials of lending institutions who don’t cross-check with Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) for status of a poperty and grant a loan for it.
RV Verma, MD and CEO and CERSAI, explains: “It is expected that the lending institutions will verify and cross-check the status of properties on the Central Registry site. And there are other laws and regulations to deal with criminal actions and frauds etc.”
However, if an officer approves a l oan f or a property and fails to send the details to CERSAI, he or she can be penalised as the Act states that ‘every defaulting company and official of the company or the secured creditor and every officer of the secured creditor not complying with the rules shall be punishable with a fine which may extend to ` 5000 for each day of default.’