---
title: "SARFAESI Act, 2002: Asset Recovery | Model Diplomat"
description: "The SARFAESI Act, 2002 lets Indian banks seize and sell secured assets of defaulters without court orders to recover NPAs—key UPSC GS3 banking reform."
url: "https://modeldiplomat.com/learn/glossary/sarfaesi-act-2002"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- The SARFAESI Act, 2002 empowers Indian banks and financial institutions to seize and sell a defaulting borrower's secured assets without court intervention to recover non-performing loans.
- How does the SARFAESI Act differ from the Insolvency and Bankruptcy Code, 2016?
- Which assets are excluded from SARFAESI enforcement?
- What recourse does a borrower have against SARFAESI action?
- Can non-banking financial companies use the SARFAESI Act?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

The SARFAESI Act, 2002 empowers Indian banks and financial institutions to seize and sell a defaulting borrower's secured assets without court intervention to recover non-performing loans.

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In 2019 the State Bank of India invoked SARFAESI Section 13(4) to take symbolic possession of properties owned by defaulting borrowers, issuing public possession notices to recover dues without filing a civil suit.

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