MCQs on THE SARFESI ACT, 2002 Part -1

Q.1:- What is the purpose of Central Registry:

• Collection of information related to securitization cases
• Registration of information relating to secured creditors and related borrowers
• Registration of transaction of securitisation and reconstruction of financial assets and creation of security interest
• Storehouse of information relating to securitized assets

Q.2:- Prior approval of RBI is not required in the following case to an ARC

• Any substantial change in the management, including appointment of any director, managing director, or chief executive officer
• Enforcement of security interest
• Change in its name
• Change of location of its registered office

Q.3:- The Jammu and Kashmir High Court shall not entertain any appeal by the borrower unless the borrower deposits with the Jammu and Kashmir High Court, due from him as claimed by the secured creditor or determined by the court of District Judge, whichever is less.

• 40
• 50
• 20
• 25

Q.4:- Under the provision of SARFAESI Act 2002, where a transaction of securitization is registered:

• Registrar of Assurances
• Registrar of Firms
• Registrar of Central Registry
• Registrar of Companies

Q.5:- For which of the following, the asset reconstruction company shall obtain prior approval of the Reserve Bank of India?

• For any substantial change in its management
• Change of location of its registered office
• Change in its name
• All of the above

Q.6:- As per provision of the SARFAEST act, 2002, when an asset is jointly financed by more than one secured creditors, who can enforce the right of the secured creditors, in case of default?

• Secured creditors representing minimum of three-fourth in the value of the outstanding debt as on the record date
• Any one of the secured creditors
• All the secured creditors together
• Secured creditors representing minimum of two-third in value of the outstanding debt as on the recorded date

Q.7:- As per provision of the SARFAESI act, 2002, Security receipts are exempted from registration:

• The registrar will decide depending upon the amount involved
• Correct
• incorrect
• Exempted only if the amount is more than 1 lath rupees

Q.8:- Which of the following does not fall within the jurisdiction for filing an application by any person aggrieved by any measure taken under Section 13(4) by secured creditors:

• Where the cause of action arises, wholly or in part
• Where the borrower resides
• Where the branch or any other office of a bank or financial institution is maintaining an account in which debt claimed is outstanding for the time being
• Where the secured asset is located

Q.9:- At the time of take over the bad loans from 3 banks it is found that these banks have field suits in different DRTs. Securitization company wants to get these cases in one DRT, which can be permitted by:

• Supreme Court
• Central Govt.
• High Court
• DRAT

Q.10:- Notice issued to borrower under section 13 (2) of SARFAESI Act requires Borrower to discharge in full his/her liability to secured creditor within no. of days , failing which the secured creditor may take possession of the underlying secured assets;

• 60 days
• 90 days
• 30 days
• 45 days

Q.11:- In case of appeal by the borrower, what is the amount to be deposited with the Appellate Tribunal:

• Twenty percent of the amount of debt due
• Sixty percent of the amount of debt due
• Fifty percent of the amount of debt due
• Forty percent of the amount of debt due

Q.12:- Under the provision of SARFAESI Act 2002 which of the following is not part of the financial asset reconstruction:

• sale if the asset
• Re-schedulement of the dues payable by the borrower
• takeover of management of the unit
• None of the above

Q.13:- The Central Government may by notification appoint a person for the purpose of registration of transactions relating to securitization, reconstruction of financial assets and security interest created over properties who shall be known as the -----------

• Central Registrar
• Secured Creditor
• Administrator
• Any of the above

Q.14:- What is the time limit within which any person aggrieved by any measure taken by secured creditors file an application to the Debt Recovery Tribunal:

• Within 60 days from the date on which such measure had been taken
• Within 45 days from the date on which such measure had been taken
• Within 30 days from the date on which such measure had been taken
• Within 15 days from the date on which such measure had been taken

Q.15:- Taking over of the management of business of a borrower by an asset reconstruction company falls under:

• Section 6 (1)
• Section 9(a)
• Section 15
• Section 13(4)(b)

Q.16:- Can central registry be maintained in electronic form:

• Yes
• No
• Yes, but database should be accompanied by the hard copies
• The central government approval is mandatory for the same

Q.17:- In case of joint financing under this Act, a creditor can:

• Take action with the permission of all the other creditors involved
• Take any action independently
• Take action only when it is agreed upon by creditors holding 50% of the debt outstanding as on that date
• Take action only when it is agreed upon by creditors holding 60% of the amount outstanding on record date

Q.18:- The Act is extends to

• Whole of India except the Union Territories
• Whole of India but excluding the states of J&K, Telengana and West Bengal
• Whole of India
• Whole of India except Jammu and Kashmir

Q.19:- Central registry is established by:

• SEBI
• RBI
• DRS
• Central government

Q.20:- An application under Section 5A of the SARFAESI Act for transfer of applications pending before two or more Debt Recovery Tribunals may be filed by an Asset Reconstruction Company before

• National Company Law Appellate Tribunal
• Debt Recovery Appellate Tribunal
• Special Court
• High Court

Q.21:- If any person contravenes or attempts to contravene the provisions of this Act, he shall be punishable with---

• Imprisonment which may extend to 1 year
• Fine
• Fine and imprisonment
• Any of the above

Q.22:- Within how many days shall the Central Registrar be intimated regarding satisfaction of security interest:

• 90 days from the date of such payment or satisfaction
• 120 days from the date of such payment or satisfaction
• 30 days from the date of such payment or satisfaction
• 60 days from the date of such payment or satisfaction

Q.23:- If there are more than one borrower, how should the demand notice be served:

• Demand notice must be served on any one of the borrowers
• Demand notice must be served only on those borrowers whose borrowing is more than 40% of the debt
• Demand notice must be served on all borrowers
• Demand notice must be served on the person whose name appears first in the list

Q.24:- Where dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets, the secured creditor may file an application to the for recovery of the balance amount from the borrower.

• Debts recovery tribunal
• State government
• Central government
• Debts recovery appellate tribunal

Q.25:- No court shall take cognizance of any offence punishable under section 27 in relation to non-compliance with the provisions the Act, except upon a complaint in writing made by an officer of the Central Registry or ......................

• RBI
• NCLT
• SEBI
• DRAT

Q.26:- The Asset Reconstruction company can make an application against the RBI within 30 days of RBI cancelling its registration certificate to

• Central Government (Ministry of Finance)
• Prime Minister
• Governor of RBI
• Government of India

Q.27:- For commencing or carrying on the business of the assets reconstruction, owned funds shall not be less than:

• 5 crore
• 1 crore
• 10 crore
• 2 crore

Q.28:- As per provision of the SARFAESJ act, 2002, in the event of non-realization of financial assets, qualified buyers of an assets reconstruction company, holding security receipts of not less than _____ of the total value of the security receipts, shall be entitled to call a meeting of all the qualified buyers and every resolution passed in such meeting shall be binding on the company:

• 75%
• 25%
• 90%
• 51%

Q.29:- Will civil court have the power to entertain any suit or proceeding in respect of any matter which a Debt Recovery Tribunal or the Appellate Tribunal is empowered by or under the SARFAESI Act, 2002?

• No
• Yes
• Reserve Bank of India permission
• Central Government permission

Q.30:- As per provision of the SARFAESI act, 2002, the RBI imposes penalty on the assets reconstruction company the ARC shall pay penalty within……days:

• 60 Days
• 45 days
• 90 days
• 30 days

Q.31:- RBI has specified that the Net Owned Fund for Asset Reconstruction Companies shall be minimum ---------- on an ongoing basis with effect from 28 April,2017

• Rs. 50 crore
• No such limit
• Rs 100 crore
• Rs 150 Crore

Q.32:- If secured creditor jointly with other secured creditors or any asset reconstruction company or financial institution or any other assignee has converted part of its debt into shares of a borrower company and thereby acquired controlling interest in the borrower company, such secured creditors beliable to restore the management of the business to such borrower

• May not
• Shall Not
• May
• Shall

Q.33:- In the process of securitization the non-liquid financial assets (NPA) are converted into marketable securities in the form of:

• Debenture
• Pass through certificates
• Receipts
• Share

Q.34:- A record called the Central Register shall be kept at the head office of the Central Registry for entering the particulars of the transactions relating to:

• creation of security interest
• reconstruction of financial assets
• securitization of financial assets
• All of the above

Q.35:- As per Change in or takeover of management of business (RBI) Guidelines, 2010, a Securitization Company may effect change or takeover of management if the amount due from borrower exceeds:

• 25
• 35
• 55
• 45

Q.36:- Asset reconstruction means acquisition by any securitization company or reconstruction company of any right or interest of any bank or financial institution in any financial assistance

• For the purpose of purchase of such financial assistance;
• For the purpose of transfer of such financial assistance;
• For the purpose of realisation of such financial assistance;
• None of the above

Q.37:- What is the threshold of assets for applicability of SARFAESI,2002

• 500 CR
• 400 CR
• 200 CR
• 100 CR

Q.38:- What is the name of Central Registry formed under SARFAESI Act, 2002

• Central Registry of Securitization Asset Reconstruction and Security Asset Interest (CERSAI)
• Central Registry of SecuredAsset Reconstruction and SecurityInterest (CERSAI)
• Central Registry of Securitization Asset Reconstruction and Security Interest (CERSAI)
• None of the Above

Q.39:- On realization of his debt in full, the secured creditor shall-------------

• Restore the management to the borrower
• Control interest in the management
• Proceed for the winding up
• Appoint any person to be a director

Q.40:- SARFAESI Act 2002 came into force on:

• 25th June 2002
• 21st June 2002
• 10th June 2002
• 01st June 2002

Q.41:- What can a secured creditor do if his dues are not fully satisfied with the sale proceeds of the secured asset:

• He cannot take further action unless the debtor agrees to the payment of the remainder amount
• He can proceed against the debtor by filing an application before the High Court
• He cannot take further action. He has to satisfy his claims with the amount received after selling the secure asset
• He can proceed against the debtor by filing an application before Debt Recovery Tribunal

Q.42:- Any document executed by any bank or financial institution in favor of the asset reconstruction company acquiring financial assets for the purpose of asset reconstruction shall be--------------

• Exempted from stamp duty
• Liable to pay stamp duty
• None of the above
• Any of the above

Q.43:- What is the time period within which the Report of Satisfaction of Security Interest is to be registered-?

• 30 days
• 60 Days
• 14 days
• 45 days

Q.44:- In a landmark case of BPV Classic Tea Factory Pvt Ltd v. Corporation Bank, the judgment given with regard to enforcement of security interest was

• No such Judgment was passed
• Both are to be abided
• SARFAESI Act prevails over Companies Act 2013
• Companies Act prevails over SARFAESI Act

Q.45:- No appeal shall be entertained unless the borrower has deposited with the Appellate Tribunal fifty per cent of the amount of debt due from him, as claimed by the secured creditors or determined by the Debts Recovery Tribunal, whichever is less. However that the Appellate Tribunal may, for the reasons to be recorded in writing, reduce the amount to not less than ..................... per cent of debt referred above.

• 15
• 20
• 35
• 25

Q.46:- As per provision of the SARFAESI act, 2002, Within how many days of sending of notice in the event of non-¬payment of dues by any borrower, the creditor shall be entitled to exercise his rights? "

• 45 Days
• 60 days
• 90 days
• 30 days

Q.47:- The Central Government may, by notification, appoint a person for the purpose of registration of transactions relating to securitization, reconstruction of financial assets and security interest created over properties, to be known as the _________

• Central Registrar
• Registrar of Companies
• Registration Officer
• Transactions Officer

Q.48:- The particulars of every transaction of securitization, asset reconstruction or creation of security interest shall be filed ,with the in the manner and on payment of such fee as may be prescribed

• Central Government
• Central Registry
• High Court
• State Government

Q.49:- Any dispute arising between Bank or financial institute & ARC or QIB shall be resolved by making an application to

• Arbitrator under Arbitration & Conciliation Act,1996
• High Court
• National Company Law Tribunal
• Regional direct

Q.50:- The Central Register shall not record particulars of transactions relating to:

• Securitization of financial assets
• Extinguishment of security interest
• Reconstruction of financial assets
• Creation of security interest