Explained: Why lenders prefer IBC over SARFAESI Act for recovery of dues

This, despite the fact that changes in the Act which come into effect shortly give primacy to secured creditors

The changes in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act that give primacy to secured creditors will come into effect shortly. But guided by past experience, lenders are more inclined to use the Insolvency and Bankruptcy Code (IBC) for recovery of dues.

“I don’t see an improvement in cases, where the SARFAESI Act has been invoked. The waterfall mechanism has brought in clarity, but unless we have value in the asset to be unlocked, there is little banks can do," said Ashok Kumar Pradhan, managing director and chief executive officer, United Bank of