Revisiting The SARFAESI Act, 2002: Strengthening Borrower Protections And The Road To Reform
- IJLLR Journal
- Mar 24
- 1 min read
Adv. Nitin Garve, LL.M., Deccan Education Society’s Shri. Navalmal Firodia Law College, Savitribai Phule Pune University
ABSTRACT
The SARFAESI Act, 2002, was coined as a significant reform to streamline the process of debtors and lenders relationship while bypassing the slow- moving and overburdened judicial process. However, over the years, its implementation has led to serious concerns regarding the borrower rights and the unfair recovery practices, and socio-economic repercussions practised by the lenders. The Act, while empowering lenders, has often been criticized this process for inadequate borrower protections and the lack of transparent methods which they follow while being disproportionate in enforcement practices. This leads to monetary and psychological distress and even displacement of the economically weaker borrowers.
This research will assist in critically examining the legal drawbacks of the SARFAESI Act, highlighting its loopholes in grievance redressal forums, misuse by fraudulent Asset Reconstruction Companies (ARCs) and even violations of certain fundamental rights including but not limited to Right to Appeal. It also assesses the judicial interpretations that attempts to balance the lender interests with borrower safeguard practices and compares this Act with other debt recovery laws to identify, analyse and implement more equitable models. By focusing on reforms that ensure ethical recovery practices, judicial oversight, and socio-economic considerations, this study will assist in providing policy-driven solutions that are not coercive in nature and are in the benefit of both the parties. This will eventually rectify the Act’s existing flaws and establish a fairer debt recovery system for the parties included in this sector.
Keywords: Debt Recovery, Borrower Rights, Judicial Interpretation, Grievance Redressal, Right to Appeal, Inhumane Activities
