The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act is an Indian law that was enacted in 2002 to enable banks and financial institutions to recover their non-performing assets (NPAs) or bad debts. The act empowers banks and financial institutions to take possession of and sell the assets of defaulting borrowers without the need for court intervention.

Some of the key provisions of the SARFAESI Act include:

1. Provision of security interest: The act provides for the creation of security interest by banks and financial institutions in respect of their loans and advances.
2. Enforcement of security interest: The act empowers banks and financial institutions to take possession of the secured assets of defaulting borrowers and to sell them to recover their dues without the intervention of a court.
3. Setting up of asset reconstruction companies (ARCs): The act provides for the setting up of ARCs to take over NPAs from banks and financial institutions and to restructure and recover the dues.
4. Establishment of Debt Recovery Tribunals (DRTs): The act provides for the establishment of DRTs to adjudicate on disputes arising out of the enforcement of security interest by banks and financial institutions.
5. Appeal to the Appellate Tribunal: The act provides for the establishment of the Appellate Tribunal to hear appeals against the orders of DRTs.

The SARFAESI Act has been instrumental in enabling banks and financial institutions to recover their NPAs and to reduce the burden of bad debts on their balance sheets. However, the act has also been criticized for its provisions that are seen as being too harsh on defaulting borrowers, who may lose their assets without adequate safeguards and opportunities for recourse.