ASSET RECONSTRUCTION COMPANIES (ARCs)

Acquisition of financial assets by ARCs from sponsors and lenders:

• RBI has decided that ARCs shall not acquire financial assets from the following on a bilateral basis:
  • a bank/ financial institution which is the sponsor of the ARC;
    
    
  • a bank/ financial institution which is either a lender to the ARC or a subscriber to the fund, if any, raised by the ARC for its operations;
    
    
  • an entity in the group to which the ARC belongs.
    
    
  
  
  
• However, they may participate in auctions of the financial assets provided such auctions are conducted in a transparent manner.
  
  
• The firm most likely to be affected by the central bank directive is Asset Reconstruction Company (India), or ARCIL, which is sponsored by State Bank of India, ICICI Bank, Punjab National Bank and IDBI Bank.