The Reserve Bank of India (RBI) on April 19, 2021 set up a committee to undertake a comprehensive review of the working of asset reconstruction companies (ARCs) in the financial sector ecosystem and recommend suitable measures for enabling them to meet the growing requirements.
- The six-member committee will be headed by Sudarshan Sen, former Executive Director, RBI.
- The committee will review the existing legal and regulatory framework applicable to ARCs and recommend measures to improve efficacy of ARCs.
What are Asset reconstruction companies?
- Asset Reconstruction Company means a company incorporated under the Companies Act and registered with Reserve Bank under section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 for the purposes of carrying on the business of asset reconstruction.
- In India, ARCs function under the supervision and control of Reserve Bank of India. ARCs are in the business of securitisation and reconstruction of financial assets. They are strictly as per SARFAESI Act and guidelines issued by Reserve Bank of India.
- Asset reconstruction companies (ARCs) are in the business of buying bad loans from banks. The business of these companies is to buy bad loans from banks at a steep discount. These companies then take special measures to recover the money.
