economics medium True/False

The SARFAESI Act, 2002 empowers banks to enforce security interests and auction collateral to recover bad loans, and this power extends equally to unsecured loans and agricultural land.

  1. True
  2. False

Answer: False

The SARFAESI Act strictly applies only to *secured* loans where a tangible asset has been pledged as collateral. It explicitly excludes unsecured loans (like credit card debt or personal loans) and, crucially, agricultural land. This exclusion protects the agrarian sector from predatory corporate lending practices and ensures that farmers' primary means of livelihood cannot be summarily seized by banks.

Topic Banking - NPA Resolution
Exam Relevance Banking, UPSC Prelims, SSC
More economics Questions Back to all questions