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CS Professional · Corporate Restructuring, Valuation and Insolvency · Debt Recovery and SARFAESI

Suraksha ARC Ltd holds a certificate of registration as a securitisation company or reconstruction company under the SARFAESI Act, 2002. It files an application before a Debts Recovery Tribunal to recover dues it acquired from a bank. Under the definitions in the Recovery of Debts and Bankruptcy Act, 1993, how is Suraksha ARC Ltd classified?

Suraksha ARC is a financial institution. The Recovery of Debts and Bankruptcy Act expressly includes a securitisation or reconstruction company holding a registration certificate under the SARFAESI Act, so no separate Central Government notification is needed and it is not treated as a bank.

  1. AA financial institution, because a registered securitisation or reconstruction company is expressly includedCorrect
  2. BA bank, because it acquired the debt from a bank
  3. CNeither, because it can sue only before a civil court
  4. DA financial institution only if the Central Government separately notifies it

Explanation

The definition of financial institution includes a securitisation company or reconstruction company which has obtained a certificate of registration under the SARFAESI Act. No separate notification is needed for it. It is not a bank, since the bank definition lists only specified categories of banks.

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