Section 3: Registration of asset reconstruction companies.

Q: What does Section 3 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) deal with?

Section 3 SARFAESI pertains to "Registration of asset reconstruction companies.". It is part of the The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, a legislation enacted by the Parliament of India. Section 3 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) governs registration of asset reconstruction companies. As verified on 22 May 2026.

Q: Is Section 3 SARFAESI still in force?

Yes, Section 3 of the The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is currently in force across the Republic of India.

Q: What is धारा 3 SARFAESI?

धारा 3 SARFAESI is the Devanagari Hindi reference for Section 3 of the The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Section 3 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) governs registration of asset reconstruction companies. As verified on 22 May 2026.

Q: What is Dhara 3 SARFAESI?

Dhara 3 SARFAESI is the Roman Hindi reference for Section 3 of the The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. "Dhara" means "Section" in Hindi. Section 3 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) governs registration of asset reconstruction companies. As verified on 22 May 2026.

Q: How to cite Section 3 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002?

Cite as: "Section 3, The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI)" in legal briefs. For academic writing, use the BlueBook format: The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, 2002, § 3 (India).

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Table of Contents

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

Chapter II — REGULATION OF SECURITISATION AND RECONSTRUCTION OF FINANCIALASSETS OF BANKS AND FINANCIALINSTITUTIONS

Section 3

Registration of asset reconstruction companies.

3. Registration of 1[asset reconstruction companies].—(1) No 2[asset reconstruction company] shall commence or carry on the business of securitisation or asset reconstruction without—

3[(b) having net owned fund of not less than two crore rupees or such other higher amount as the Reserve Bank, may, by notification, specify;]

Provided that the Reserve Bank may, by notification, specify different amounts of owned fund for different class or classes of 2[asset reconstruction companies]:

Provided further that a 1[asset reconstruction company], existing on the commencement of this Act, shall make an application for registration to the Reserve Bank before the expiry of six months from such commencement and notwithstanding anything contained in this sub-section may continue to carry on the business of securitisation or asset reconstruction until a certificate of registration is granted to it or, as the case may be, rejection of application for registration is communicated to it.

(2) Every 1[asset reconstruction company] shall make an application for registration to the Reserve Bank in such form and manner as it may specify.

(3) The Reserve Bank may, for the purpose of considering the application for registration of a 1[asset reconstruction company] to commence or carry on the business of securitisation or asset reconstruction, as the case may be, require to be satisfied, by an inspection of records or books of such 1[asset reconstruction company], or otherwise, that the following conditions are fulfilled, namely:—

5* * * * *

6[(f) that a sponsor of an asset reconstruction company is a fit and proper person in accordance with the criteria as may be specified in the guidelines issued by the Reserve Bank for such persons;]

7[(h) that 1[asset reconstruction company] has complied with one or more conditions specified in the guidelines issued by the Reserve Bank for the said purpose.]

(4) The Reserve Bank may, after being satisfied that the conditions specified in sub-section (3) are fulfilled, grant a certificate of registration to the 1[asset reconstruction company] to commence or carry on on business of securitisation or asset reconstruction, subject to such conditions, which it may consider, fit to impose.

(5) The Reserve Bank may reject the application made under sub-section (2) if it is satisfied that the conditions specified in sub-section (3) are not fulfilled:

Provided that before rejecting the application, the applicant shall be given a reasonable opportunity of being heard.

(6) Every 1[asset reconstruction company] shall obtain prior approval of the Reserve Bank for any substantial change in its management 8[including appointment of any director on the board of directors of the asset reconstruction company or managing director or chief executive officer thereof] or change of location of its registered office or change in its name:

Provided that the decision of the Reserve Bank, whether the change in management of a 1[asset reconstruction company] is a substantial change in its management or not, shall be final.

Explanation.—For the purposes of this section, the expression "substantial change in management " means the change in the management by way of transfer of shares or 8[change affecting the sponsorship in in the company by way of transfer of shares or] amalgamation or transfer of the business of the company. 1. Subs. by Act 44 of 2016, s. 3, for "securitisation company or reconstruction company " (w.e.f. 1-9-2016). 2. Subs. bys. 3,ibid., for "securitisation companies or reconstruction companies " (w.e.f. 1-9-2016). 3. Subs. by s. 5, ibid., for clause (b) (w.e.f. 1-9-2016). 4. Subs. bys. 3,ibid.,for "qualified institutional buyers " (w.e.f. 1-9-2016). 5. Omitted by s. 5, ibid. (w.e.f. 1-9-2016). 6. Subs. by s. 5, ibid., for clause (f) (w.e.f. 1-9-2016). 7. Ins. by Act 30 of 2004, s. 3 (w.e.f. 11-11-2004). 8. Ins. by s. 5, ibid. (w.e.f. 1-9-2016).

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