Multiple choice

Can moveable securities in possession of the bank be sold by the bank without the intervention of the court?

  1. No, a court order is required to sell the security.

  2. Yes, bank can sell as provided in the Contract Act, 1872.

  3. Yes, as the SARFAESI Act, 2002 has made provisions to that effect.

  4. No, until the account is not declared as NPA by the bank.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

As per SARFAESI Act, 2002, upon loan default, banks can seize the securities (except agricultural land) without intervention of the court. The Act gives powers of “seize and desist” to banks. Banks can give a notice in writing to the defaulting borrower requiring it to discharge its liabilities within 60 days. If the borrower fails to comply with the notice, the Bank may take recourse to take possession of the security for the loan, sale or lease or assign the right over the security and manage the same or appoint any person to manage the same.

Keep practicing — related questions