SARFAESI Act, 2002
SARFAESI Thresholds and Percentages: Revision Chart
Alongside its deadlines, SARFAESI runs on a handful of numbers: the amounts that decide whether the Act applies at all, and the percentages that govern deposits, consents and investor control. Objective papers test them directly, and they are easily swapped. This note sets out every amount and percentage, with its source, and separates the ones that look alike.
1. Amounts
Figure 1: The rupee thresholds
- Rs 1 lakh. The Act does not apply to a security interest for a financial asset not exceeding Rs 1 lakh, s.31(h) (Topic 5)
- NBFCs: Rs 100 crore and Rs 20 lakh. Under the 2021 notification, an NBFC with assets of Rs 100 crore and above may enforce secured debts of Rs 20 lakh and above (Topic 48)
- ARCs: Rs 300 crore. An ARC needs a net owned fund of Rs 300 crore under the RBI Master Direction of 2024 (Topic 74)
- Comparison. Rs 20 lakh for the RDB Act and a default of Rs 1 crore for the IBC (Topic 84)
2. Percentages
Figure 2: Deposits, consents and control
- 20%, s.31(j). No enforcement where the amount due is less than 20% of the principal and interest (Topic 23)
- 25% and 50%. The buyer deposits 25% at once under Rule 9(3); an appellant deposits 50% of the debt claimed or determined, whichever is less, which the DRAT may cut to 25% but never waive, s.18 (Topic 39)
- 60%, s.13(9). Where several lenders finance one asset, creditors holding 60% in value must agree, and bind the rest (Topic 24)
- 75%, two meanings. Qualified buyers holding 75% of security receipts may call a meeting and bind the ARC, s.7(3); the 75% deposit for a s.17 application was struck down in Mardia (Topics 20, 7)
⚠ Exam trap Do not swap 60 and 75: consortium consent under s.13(9) is 60% in value, while 75% belongs to qualified buyers under s.7(3) and to the deposit struck down in Mardia. Do not swap 20 and 25: 20% is the s.31(j) floor of dues, 25% the auction deposit and the minimum s.18 pre-deposit. And the 90-day overdue test for an NPA comes from RBI norms adopted through s.2(1)(o), not from the Act. |
3. Frequently Asked Questions
When does SARFAESI not apply because of the amount involved?
Under Section 31(h), the Act does not apply to a security interest securing a financial asset of not more than one lakh rupees, and under Section 31(j) it does not apply where the amount due is less than twenty per cent of the principal amount and interest. For notified non-banking financial companies, the 2021 notification adds its own conditions: assets of at least one hundred crore rupees and a secured debt of at least twenty lakh rupees.
What percentage must be deposited to appeal under Section 18?
A borrower appealing to the Debt Recovery Appellate Tribunal must deposit fifty per cent of the debt claimed by the secured creditor or determined by the Debt Recovery Tribunal, whichever is less. The Appellate Tribunal may, for reasons recorded, reduce the deposit to twenty-five per cent but cannot waive it, as the Supreme Court held in Narayan Chandra Ghosh v UCO Bank (2011).
4. Related Topics
- Topic 85: SARFAESI Time Limits. The deadlines that sit beside these figures.
- Topic 23: Conditions Precedent. Where the 20% and Rs 1 lakh bars operate.