The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 — universally known as the SARFAESI Act — is the statutory framework governing secured-asset enforcement by banks and financial institutions in India. It allows secured creditors to enforce security without the intervention of courts, subject to procedural safeguards and appellate mechanisms before the Debts Recovery Tribunal (DRT) and appellate tribunals.
**Core mechanism.** When a borrower defaults on a secured loan, the secured creditor can issue a demand notice under Section 13(2) of the Act giving 60 days to repay. If repayment does not follow, the creditor can take possession of the secured asset under Section 13(4), sell it at auction, and appropriate the proceeds towards the debt. All of this happens without a civil suit.
**Borrower safeguards.** A borrower aggrieved by SARFAESI action can approach the DRT under Section 17 of the Act (the "application" procedure) within 45 days of the action complained of. The DRT has power to set aside possession, restrain the sale, or direct restoration. Appeals from the DRT lie to the Debts Recovery Appellate Tribunal (DRAT) under Section 18, subject to a pre-deposit of **50%** of the debt due as claimed by the secured creditor or determined by the DRT, whichever is less. The DRAT has discretion, for reasons recorded in writing, to reduce the deposit to a minimum of **25%** — it cannot waive below 25% and cannot waive the deposit entirely (the Supreme Court clarified this in *Sidha Neelkanth Paper Industries v. Prudent ARC* (2023)).
**Practical significance.** SARFAESI enforcement is a major area of banking-law practice. It is also a primary enforcement route for NBFC and BFSI entities. Borrower-side practice involves Section 17 applications, stay arguments, and navigating the pre-deposit requirements for DRAT appeals.
**Constitutional challenges.** The SARFAESI Act's validity has been upheld by the Supreme Court in multiple cases, but specific procedural aspects continue to be litigated — especially the adequacy of borrower notice, the pre-deposit requirement, and the scope of DRT's authority.