banking service chronicle This article was published in the month of October ASSET RECONSTRUCTION COMPANIES (ARCS) RBI has amended regulatory framework for Asset Reconstruction Companies (ARCs). It was based on recommendations of the committee headed by Sudarshan Sen to undertake comprehensive review of the working of ARCs. Key guidelines are: o Allowed ARCS with minimum net owned fund of ₹1000 crore to act as resolution applicants under the Insolvency and Bankruptcy Code (IBC) 2016.Earlier Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act) prohibited ARCs from doing other activities than that of securitisation or asset reconstruction without RBIs permission.IBC provides for a time-bound process for resolving insolvency in companies and among individuals. o Raised minimum capital requirement for setting up an ARC to Rs 300 crore from the existing Rs 100 crore in a phased manner. o Changes in corporate governance norms like to constitute an Audit Committee which shall comprise of non-executive directors only. About ARC o ARC has been set up to provide a focused approach to Non-Performing Assets resolution on recommendations of Narasimham Committee- II. o It is a company registered under Section 3 of SARFAESI Act 2002. o It is regulated by RBI as a Non-Banking Financial Company banking service chronicle.
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