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WHO IS A SECURED CREDITOR
& WHEN CAN SECURITY BE ENFORCED
A secured creditor means any bank or financial institution or any
consortium or groups of banks or financial institutions and includes
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Debenture trustee appointed by bank or financial institution
Securitisation company or reconstruction company
Any other trustee holding securities in whose favour security
interest is created for due repayment by any borrower of any
financial assistance.
WHEN CAN SECURITY BE ENFORCED
Any security interest can be enforced by a secured creditor without
intervention of Court or Tribunal in accordance with the provisions
of the Act.
Such action can only be taken any borrower, who is under liability
to a secured creditor under a security agreement, makes any default
in repayment of secured debt or any installment thereof and the
account is classified as NPA. (Non Performing Asset by the secured
creditor)
No action can be taken if:
It is agricultural land
When amount due is less than Rs. one Lakh
When amount due is less than 20% of the principal amount and
interest thereon, i.e. the borrower has repaid more than 80%
of the principle amount and interest.
No action can be taken if the debt is time barred under the Limitation
Act.
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