New Delhi, Sept. 3 -- The Supreme Court on Wednesday held that banks can invoke the SARFAESI Act, 2002, to recover secured non-performing loans acquired from non-banking financial companies (NBFCs), even if the NBFCs were not covered under the Act when the loans were originally sanctioned.

A bench of Justices Sanjay Kumar and Sanjeev Sachdeva set aside a Bombay High Court judgment that had restricted Kotak Mahindra Bank from invoking the SARFAESI Act to recover loans assigned to it by City Financial Consumer Finance Ltd (CFCFL), an NBFC that was not a notified financial institution under Section 2(1)(m) of the Act when the loans were advanced.

Loan Acquires SARFAESI Status After Bank Assignment

The dispute involved three sets of mortga...