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      Question

      Section 2(1)(j)(ii) of the SARFAESI Act defines

      'default' in the context of debt securities. After what period of notice demanding payment of dues from the debenture trustee does non-payment constitute a 'default' for the purpose of the Act?
      A 90 days Correct Answer Incorrect Answer
      B 60 days Correct Answer Incorrect Answer
      C 30 days Correct Answer Incorrect Answer
      D 45 days Correct Answer Incorrect Answer
      E 180 days Correct Answer Incorrect Answer

      Solution

      Section 2(1)(j)(ii), inserted by the 2016 Amendment Act, defines 'default' in the context of debt securities as non-payment of any debt or any other amount payable by the borrower with respect to debt securities after a notice of 90 days demanding payment of dues served upon such borrower by the debenture trustee or any other authority in whose favour security interest is created for the benefit of holders of such debt securities. This is distinct from the NPA-based default under Section 2(1)(j)(i), where the trigger is classification of the account as NPA. The 90-day notice period for debt securities is a separately tested provision from the 60-day demand notice under Section 13(2).

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