Mumbai, April 28, 2017

The Reserve Bank today said all the existing Asset Reconstruction Companies (ARCs) must have a minimum net-owned corpus of Rs 100 crore by March 2019.

The government as well as RBI have envisaged a greater role for ARCs in resolving stressed assets. These companies are in the business of buying bad loans from banks to turn them around.

In a notification, RBI said that it "has been decided to fix the minimum NOF requirement for ARCs at Rs 100 crore on an ongoing basis".

As per amended SARFAESI Act, 2016, no ARC can commence or carry on the business of securitisation or asset reconstruction without having Net Owned Fund of not less than Rs 2 crore or such other higher amount as the Reserve Bank may, by notification, specify.

Today's RBI notification said the existing ARCs not meeting the minimum Net Owned Fund (NOF) criteria have been asked by RBI to achieve the minimum NOF of Rs 100 crore latest by March 31, 2019.

In its last bi-monthly monetary policy, RBI had proposed to stipulate a minimum NOF of Rs 100 crore for ARCs in view of their enhanced role and greater cash based transactions.

[The Economic Times]