The Reserve Bank of India and the Government of India took number of measures from time to time like One Time Settlement Scheme (OTS), Debt Recovery Tribunals (DRTs), Lok Adalats, etc. to stem the rot, but fell short of the desired results and high expectations of the concerned people in particular and society in general. The government of India was critised and faced scathic attack from different quarters of the economy and the society. Obsessed with the criticism, the Government of India promulgated Securitisation Ordinance in June 2002 and enacted the full fledged Act in December 2002 entitled Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002. This is also known as SARFAESI Act 2002 or simply the Securitisation Act.
The passage of Securitisation Law had led to heated, debates and discussion across the different sections of the society. It was also alleged that Act violated the principle of natural justice on various counts such as secured creditors have become both judge and executioner, parallel powers not given to the borrowers, lenders to determine the outstanding, civil courts jurisdiction ousted, only post – decisional review is allowed, post – decisional review is remedy after action has been taken, discretion to select the borrowers will be misused by lenders, no difference between willful and unwillful defaulters, Act has nullified the interest of secured debenture holders and others and taken over assets are sold without inviting tenders.
