Bank invoked sarfaesi on us within 10 days of NPA classification. We kept on clearing all dues of principal and interest repeatedly after NPA and Sarfaesi and continously requested the bank to upgrade accounts to standard and withdraw sarfaesi action. Bank refused. This way our SSI unit became sick. Bank is persisting on reovery under sarfaesi act.
RBI guidlines state that borrowers accounts should be upgraded to standard on clearence of arrears of Principal and interest. If Sarfesi is invoked immediately on NPA does it not be an illegal act because it violates this RBI guideline auitomatically??
Further, RBI guidlines mandate the banks to attempt debt restructure / Nursing for rehabilitation of SSI. If Sarfaesi act is invoked immediately, this guidlines are also violated automatically.
Further the preface of Srafesi act states that Narasihmn committe recomended this act for quick recovery of banks Long Term dues to improve bank's financial health. By virtue of this spirit of enactment of this act - if the bank invokes Srafesi act immidiately on NPA, especially on small borrowers - is the action illegal??
Please comment.
