Master Circular – Asset Reconstruction Companies
This circular outlines the guidelines and instructions for Asset Reconstruction Companies (ARCs) in India.
Applicability and Definitions
The guidelines are applicable to all ARCs registered with the Reserve Bank of India (RBI). The circular defines key terms, including Asset Reconstruction, Net Owned Fund (NOF), and Financial Assets.
Registration and Net Owned Fund
ARCs must register with the RBI and maintain a minimum NOF of ₹100 crore by October 11, 2022, ₹200 crore by March 31, 2024, and ₹300 crore by March 31, 2026.
Permissible Business and Asset Reconstruction
ARCs can acquire financial assets from banks, financial institutions, and other ARCs. They can also change or take over the management of the borrower’s business under certain conditions.
Measures of Asset Reconstruction
ARCs must have a policy in place for changing or taking over the management of the borrower’s business. This includes eligibility conditions, grounds for effecting change or takeover, and explanations for the same.
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