Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, 2002 (SARFAESI Act, 2002) was enacted to provide banks and financial institutions with a more effective framework to enforce the security structure underlying loans and advances given by them, and recover their dues expeditiously.
Banks and Financial Institutions can benefit from SARFAESI. The term ‘bank’ includes all banking companies, including co-operative banks. However, regional rural banks have been kept out.
‘Financial institution’ means:
• A public financial institution within the meaning of the Companies Act, 1956
• Any institution specified by the Central Government under the Recovery of Debts due to
Bank and Financial Institutions Act, 1993
• The International Finance Corporation, established under the International Finance
Corporation (Status, Immunitis and Privileges) Act, 1958
• Any other institution or non-banking financial company as defined in the Reserve Bank of
India Act, 1934, which the Central Government may specify as a financial institution for
the purposes of the Act.
The bank or financial institution which has lent money to a borrower is also called originator in the context of securitization.

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