Companies & Sectors
SARFAESI extended to NBFCs: More power to systematically important companies
The non-banking financial company (NBFC) sector in the country crossed a new milestone, as the Finance Ministry redeemed a promise made long time back in Budget 2015. A total of 196 systematically important NBFCs, with assets of Rs500 crore or more as per their last balance sheets have been notified as ‘secured lenders’ under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). As such, these NBFCs may now enforce security interests on assets charged to them, without having to resort to either judicial or arbitral authorities. 
The SARFAESI Act is due for a major strengthening, as Parliament recently passed an amending Bill 2016, which gives further strength to its provisions. The Bill has been passed by the both the Houses, and awaits the assent of the President, after which it may be given effect by a notification of the Ministry.
The extension of SARFAESI Act to NBFCs brings a much-needed level-playing field between NBFCs and banks. NBFCs did better than many banks in terms of debt recoveries, despite not having statutory powers; how, armed with powers of repossession, there will hopefully be more debt discipline and better recoveries than ever. Eventually, one may expect the cost of credit to come down. 
SARFAESI powers for facilities above Rs1 crore:
The Notification dated 5 August 2015, names 196 NBFCs, including most of the larger asset finance companies, and factoring companies. Several of the infrastructure finance companies had earlier been defined as ‘public financial institutions’ using section 4A of the Companies Act 1956.
While the whole of the SARFAESI Act has been extended to the notified NBFCs, the Notification clearly provides that sections 13 to 19 of the Act can be used only in respect of  ‘such security interest which is obtained for securing repayment of secured debt with principal amount of rupees one crore and above’.
As may be expected, there may be lot of confusion about the interpretation of this clause in the Notification. While the intent is clear – that new-begotten powers are not used for consumer loans, retail lending etc., the computation of the limit of Rs1 crore may be subject to questions. In the opinion of the author, the threshold limit of Rs1 crore refers to the facility, that is, the original amount of lending, which is secured. There may, for instance, be various interpretations: 
1. Original secured debt Rs1 crore, current amount outstanding Rs60 lakh
2. Original facility amount Rs1 crore, amount of drawdown, Rs80 lakh, current outstanding Rs60 lakh
3. Original facility amount Rs80 lakh, value of security Rs1.20 crore, current outstanding Rs60 lakh
4. Original facility amount Rs80 lakh, value of security Rs1.20 crore, current outstanding Rs1.10 crore
5. Original facility amount Rs1 crore, under which several assets (say, cars) were financed. Original principle value of all facilities adds to Rs1 crore, but individually, none of them reach that threshold.
Based on the above, No 1 and No 5 will be covered by the Notification.
Will the notification apply to existing facilities?
A question may arise whether the Notification is applicable only for facilities, which are granted on or after the notification date, or will it apply to existing facilities. This question arose when the SARFAESI was first implemented in 2012. There have been rulings, such as the Supreme Court ruling in the case of Mardia Chemicals, that the Act is merely a device of enforcement. It is not a new power; it is simply a new method of enforcing an existing power. 
Therefore, the notification will cover existing facilities as well.
A question may also arise – does the Notification cover existing cases pending at different stages – for example, arbitration, and civil proceedings? Generally speaking, if there is a change of law, and a party finds a better way of enforcing one’s claims, one may withdraw from an existing proceeding by seeking the leave of the forum, and then, use SARFAESI process for enforcement.
Non-notification cases:
Question also arises, what about cases, which are not covered by the Notification? This includes two types of cases:
  • NBFCs not covered by the Notification at all
  • NBFCs covered by the Notification, but the funding is not covered by virtue of the threshold amount
  • In both the cases, civil law or arbitral remedies will still exist.
Bankruptcy Code and the SARFAESI Act:
How does the SARFAESI process work in a case which is referred under the Bankruptcy Code? There is a moratorium during the period when an insolvency resolution process is going on, both in case of individuals and in case of corporate debtors, under the Bankruptcy Code. The maximum period for the insolvency resolution process is 180 days (extendible by another 90 days) in case of corporate persons. There is no overall maximum limit in case of non-corporate entities, but there are timelines for each sub-step. 
However, once the insolvency resolution period ends, the entity will be either put on revival, or put under liquidation. In case of revival orders, the eligibility of the lender to exercise SARFAESI powers will depend on what agreement has been struck between the lenders for revival. In case of bankruptcy, the power of the lender to use SARFAESI survives, of course, after proving for security interest before the liquidator. 
SARFAESI Amendment Bill
The 2016 Amendment Bill brings several significant changes to the SARFAESI Act. Importantly, secured corporate debentures are brought under the purview of the Act. A new necessity and invincibility is sought to be granted to registration of security interests with Central Registry of Securitisation Asset Reconstruction and Security Interest (CERSAI), with a provision stating that unregistered security interests will not be enforceable at all. At the same time, if there is a registered security interest, it will gain supremacy over all other conflicting or overlapping claims, including those of the government.
(CA Vinod Kothari is an author, trainer and consultant on specialised financial subjects like housing finance, securitisation, credit derivatives, accounting for financial instruments, structured finance and banking regulations. Mr Kothari through his firm Vinod Kothari and Company is also engaged in practice of corporate laws for over 25 years.)  



Ramesh Poapt

2 months ago

NBFCs are having good support to develop from Govt.?RBI.
Dr Rajan said 2 days backs that NBFCs finance where banks
not ready.They will be governed strictly.

PM Modi takes the lead in disclosing salaries of PMO staff
That, government salaries quite match those in the corporate world, has been aptly proven with Prime Minister Narendra Modi taking the bold step of pro-active disclosures, under Section 4 of the Right to Information (RTI) Act by public authorities, on the Prime Minister’s Office (PMO) website.
Please note that the salary disclosures uploaded on the website are for the financial year 2015-16, which is before the implementation of the seventh pay commission, jacking up the salaries by 21%. 
The PMO comprises 122 gazetted and 281 non-gazetted posts (excluding the personal staff of Prime Minister, Minister of State, National Security Advisor and former Prime Ministers). The salaries paid for the financial year 2015-16 for this came to around Rs26.4 crore.
Forget that the top notch officers in the PMO draw a salary between Rs1.75 lakh to over Rs2 lakh per month, the rest of the staff members are indeed in a comfortable financial position, compared to their peers in the private sector. For example, Dharamchand, a dispatch driver earns salary of Rs51,690 plus pension. Vijaykumar Singh, photostat operator gets salary of Rs35,595 while Mohammad Umar (carpenter) receives Rs35,925 every month. Sipahi Prasad is the highest paid peon (called the multi-tasking staff) at Rs40,011 and there are 72 of them. Neeraj Verma, the senior translator earns Rs61,580, Krishna Kumari, library clerk earns Rs58,553, R Suresh, personal assistant, earns Rs67,529, while another personal assistant, MS Rana earns Rs68,667. There are four of them in this salary range out of the 33 at this position. Tarun, assistant section officer, is the highest paid at Rs52,841 amongst 80 such officers. Ramesh Chandra, assistant reference officer earns Rs54,900 while Dinesh Bisht, an executive assistant earns Rs73,781 per month as salary in the PMO.
Amongst senior officers, Bhaskar Khulbe, Secretary in the PMO gets a salary of Rs2 lakh, Nripendra Mishra, Principal Secretary to the PM and RK Mishra, the Additional Principal Secretary to the PM are paid Rs1.62 lakh plus pension every month. Subrata Hazra, under-secretary gets paid a salary of Rs91,733. Rajeev Topan, personal secretary to the PM earns Rs1.47 lakh per month as salary. The six joint secretaries earn between Rs1.60 lakh and Rs1.78 lakh, while directors earn between Rs1.20 lakh and Rs1.38 lakh every month. PMO’s public relations officer, JM Thakkar earns a salary of Rs99,434 plus pension in a month. 
Considering that similar grades would be applicable to other central government and state government employees, they are taken care of well enough to work with corporate efficiency and accountability. After all, their salaries come from the taxes that citizens pay from their hard-earned money and hence, they need to be totally accountable to the citizens and the government. Also, the salaries are good enough for decent living and the avarice for money through commission, kickbacks and bribes which account for multiples of the salary of those who indulge in these illegal practices, is indeed condemnable.
Now that Prime Minister Modi has set the ball rolling in transparency of not only salaries of his staff but other information falling under pro-active disclosures under Section 4 of the RTI Act, all other public authorities must follow suit.
Following are the public disclosures on the PMO website, as per the various sections of Section 4 of the RTI Act:

Article under

Requirement under the Act



The particulars of its organisation, functions & duties

Under the Allocation of Business Rules 1961, the Prime Minister’s Office (PMO) provides secretarial assistance to the Prime Minister.

PMO is headed by the Principal Secretary to PM. Presently there are 122 Gazetted and 281 Non-Gazetted posts in PMO (excluding the personal staff of Prime Minister / Minister of State / National Security Advisor and former Prime Ministers).

The main premises of PMO is located in the South Block. However, certain branches are located at Rail Bhavan (RTI Section) & Parliament House (Parliament Section). It also functions from the Prime Minister’s House at RCR.

Organisation Structure of PMO

Section-wise Work Allocation


The powers & duties of its officers and employees

Work distribution in PMO


The procedure followed in the decision making process, including channels of supervision and accountability.

The Prime Minister’s Office (PMO) provides secretarial assistance to the Prime Minister inter-alia assisting, as required, for decisions on proposals received.

Instructions contained in Manual of Office Procedure are followed.


The norms set by it for the discharge of its functions.

As the head of Council of Ministers, the Prime Minister presides over Cabinet meetings and oversees the works of all the Ministries.

Instructions contained in the Government of India (Allocation of Business) Rules, 1961, the Government of India (Transaction of Business) Rules, 1961 and Manual of Office Procedure are followed during discharge of functions of PMO.


The rules, regulations, instructions, manuals and records, held by it or under its control or used by its employees for discharging its functions

The rules / regulation etc. as applicable to Central Government Employees / All India Service Officers and Central Government Offices are used for discharging of its functions. An illustrative list is at Annex-IV


A statement of the categories of documents that are held by it or under its control

Apart from the matters like administration of Prime Minister’s Office, public grievances, PMNRF etc, the issues which are received in PMO for information / comments / orders of Prime Minister originate in some other Ministry / Department, Cabinet Secretariat, State Government and other organization.

(Vinita Deshmukh is consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte and is the author of “The Mighty Fall”.)



singh jasbir

2 months ago


Bapoo Malcolm

2 months ago

Now, is it possible to have a list of the other incomes?


3 months ago

While I don't grudge the salary-drawn by a Government employee, it should match the work output and integrity of the employee.


3 months ago

What need was there for proof? That the Government pay is far higher than Private Sector, even if you do not count the Perks, Bribes, Medical Junkets abroad and Pension, is a long established fact. This is a major contributory to India's run away inflation as a very large proportion of India's population are on Government pay roll and produce very little apart from pervasive bribe taking on account of tending to India's multiple webs of totalitarian and extortionate laws. To add urine to this pile of dung, the vast majority of these over paid bribe takers are Constitutionally Certified to be Congenitally Backward. They produce nothing of value to the citizen but only pomp, pelf, pleasure, and perversion to those who succeeded the British as the masters of this rusted iron frame, colonial Constitution, laws and courts.

Leslie Menezes

3 months ago

Mr Modi should take steps to curb silent corruption in the ministries. So called "honest babus" are skimming 1% to 5% of the budget on each purchase they so called approve. The salary is a perk for these babus.

Deepak Narain

3 months ago

It is very informative material. These pre-revised salaries in itself are very high. These will further rise very significantly after revision. At citizen's perception, the performance of govt is very poor. I retired from govt as deputy secretary in 2002. My revised Pension will now amount to Rs 41172/- pm, i.e. near equal to the pre-revised salary of Rs 40,011/- pm of Sipahi Prasad, Peon in PM's office. People like me are much poorer than the peons in PM's office. Govt's economic policy has brought the interest rates down from 11% to 8.5%. That has brought our income further down. What is the use of such a govt for us? At least, OROP should be implemented for civilian staff also so that they could also live the last years of their lives with dignity.


Harikrishnan Thattai

In Reply to Deepak Narain 2 months ago

Dear Deepak Narain, why have you placed your dignity in the remuneration rather then yourself. You are demeaning yourself the the word.

suneel kumar gupta

3 months ago

Now we should compre their commitment.

MG Warrier

3 months ago

Today (August 11, 2016) there was an article on MPs’ salaries in The Hindu. My response is copied below:
Legislator’s salary
The well-researched short piece on MPs’ salaries (The Hindu, Parliament, August 11), hopefully, will open a healthy debate on the whole issue of wages and income across sectors and hierarchies in government and private sector in India. The highest paid Indian ‘employee’ who together with his spouse took home a gross annual salary of over Rs 100 crore for several consecutive years was from a small company in South India.
The RBI governor’s annual salary is a small percentage of the gross emoluments of the CEOs of some of the private sector banks. While in government, public sector and some of the private sector organisations there are transparent norms for deciding wages and career progression, these are conspicuous by their absence for majority of the wage-earners in India.
Comparisons with experiences abroad made in the article may not lead us anywhere. It is a fact that, if we factor in the ‘costs’ for becoming a member of parliament, the salary for the uncertain term during which one will remain as an MP is too low by any standard. Thus, the issue reduces to one of ‘who should be deciding MPs’ salaries?.
GOI may consider setting up a permanent body with required statutory authority to monitor the relationship between the nature of jobs and remuneration paid in Government, public sector and in private sector and make recommendations on broad bands of wages payable for different categories of jobs.
M G Warrier, Mumbai


Abhijit Gosavi

In Reply to MG Warrier 3 months ago

Good reporting. "The 'costs' for becoming MP"... can you elaborate? Do you mean, sir, the risks some of them have to undertake in hiring goondas etc or maybe in employing Radia types? When has an MP/MLA or ex-MP/MLA ever seen poverty in recent times? They did when they used to be the kind that actually served the nation (e.g., the first couple of CMs of West Bengal).

Meanwhile, like someone said above, the interest rates have fallen dramatically. Senior citizens who never worked for the govt & have no pensions as a result but rely on fixed deposits have been affected by the lowering of the interest rates. They also had many costs in their life you know and pretty uncertain outcomes at the end.

And set up another body? Who will pay its members? Who will determine their salaries? Talk about making a government fatter.

Govinda Warrier

In Reply to Abhijit Gosavi 3 months ago

Your concerns are genuine I have always been arguing for a realistic rational prices wages and income policy relevant in the Indian context The problem is much graver than looting by politicians or corruption in government

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