SARFAESI Act applies to co-operative banks: SC

Tribune News Service
New Delhi, May 5

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Act 2002 (SARFAESI Act) applies to co-operative banks, the Supreme Court ruled on Tuesday.

A five-judge Constitution Bench headed by Justice Arun Mishra held that co-operative banks were “banks” within the meaning of Section 2(1)© of SARFAESI Act and had to be treated like banks for recovery proceedings under the Act.

Holding that Parliament had the legislative competence to bring cooperative banks under the ambit of SARFAESI Act, the Bench upheld the validity of a 2003 notification by which co­-operative banks were brought within the class of banks entitled to seek recourse to certain provisions of the Act.

In a unanimous decision, it said co-operative banks can’t carry on any activity without complying with provisions of Banking Regulation Act, 1949, and other laws, including RBI Act, applicable to such banks.