Guidelines for Change in or Take Over of Management by Securitisation Companies and Reconstruction Companies
The Reserve Bank of India (RBI) has issued guidelines for securitisation companies (SCs) and reconstruction companies (RCs) to change or take over the management of a borrower’s business.
Object: The guidelines aim to provide a framework for SCs/RCs to effectively manage the business of borrowers, ensuring timely recovery of dues and minimizing losses.
Scope: The guidelines apply to all SCs/RCs registered with the RBI, and cover the powers, eligibility, and grounds for changing or taking over the management of a borrower’s business.
Eligibility: SCs/RCs must meet certain eligibility conditions, including having a valid registration with the RBI, to exercise the power of changing or taking over management.
Grounds for Takeover: The guidelines outline the grounds for effecting a change in or takeover of management, including default in repayment, mismanagement, and fraud.
Policy: The guidelines provide a policy framework for SCs/RCs to follow when changing or taking over the management of a borrower’s business, including the need for a transparent and fair process.
Procedure: The guidelines outline the procedure to be followed by SCs/RCs when changing or taking over the management of a borrower’s business, including the requirement for prior approval from the RBI.
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