Master Circular – Asset Reconstruction Companies
The circular outlines guidelines and instructions for Asset Reconstruction Companies (ARCs).
Applicability and Definitions
The guidelines are applicable to all ARCs registered with the Reserve Bank of India (RBI). The circular defines key terms, including ARCs, financial assets, and net owned fund.
Registration and Net Owned Fund
ARCs must register with the RBI and maintain a minimum net owned fund of ₹2 crore.
Permissible Business
ARCs are permitted to engage in asset reconstruction, including the acquisition of financial assets, and measures to reconstruct assets.
Asset Reconstruction
ARCs can acquire financial assets from banks, financial institutions, and other ARCs. They can also take over the management of the borrower’s business under certain conditions.
Measures of Asset Reconstruction
ARCs can effect a change in or takeover of the management of the borrower’s business if certain eligibility conditions are met. The circular outlines the grounds for such actions, policy guidelines, and reporting requirements.
Sale of Financial Assets
ARCs can sell financial assets acquired through reconstruction.
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