Skip to content

CS Professional · Banking and Insurance - Laws and Practice · Advances, Securities and Documentation

A lender registered its security interest over a borrower's machinery with the Central Registry in 2021. In 2026 the borrower defaults, and the lender seeks to enforce under Chapter III of the SARFAESI Act, 2002. Regarding the registration requirement, what is correct?

The lender meets the requirement. Section 26D permits a secured creditor to enforce under Chapter III once the security interest created in its favour by the borrower is registered with the Central Registry, and it makes no distinction by asset type or kind of borrower.

  1. ARegistration is optional and only affects priority among creditors
  2. BRegistration is needed only for immovable property, not machinery
  3. CRegistration is required only if the borrower is a company
  4. DThe lender satisfies the condition, since the security interest created in its favour was registered with the Central RegistryCorrect

Explanation

Section 26D conditions enforcement under Chapter III on registration of the security interest created in the creditor's favour with the Central Registry. The lender has registered, so the condition is met. The Section draws no distinction by type of asset or borrower, and registration is not optional for enforcement.

Did you get it right without looking?

One question tells you little. A timed set on Advances, Securities and Documentation shows your real accuracy, how long you take and where you lose marks.

Practise Advances, Securities and DocumentationFree diagnostic mock

More Advances, Securities and Documentation questions