Private credit may get more teeth to recover loans
AI summary
Private credit funds in India face significant hurdles in recovering defaulted loans because they do not qualify as secured creditors under the Sarfaesi Act. Unlike banks, these funds cannot easily enforce security or seize assets without undergoing complex legal proceedings.
Key takeaways
- Private credit funds lend directly to mid-sized businesses that struggle to secure bank loans.
- These funds are regulated by Sebi as close-ended category-II alternative investment funds.
- They lack secured creditor status under the Sarfaesi Act, limiting their recovery options.
- Enforcing security against defaulters requires a complex legal process for these funds.
Read the original at Mint
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