List of Top 100 ASSET RECONSTRUCTION COMPANY - ARC in India

ARC ASSET RECONSTRUCTION COMPANY : TOP100 Total : 84

TOP (ARC) ASSET RECONSTRUCTION COMPANIES IN INDIA

Evolving distressed asset market and inherent risk associated with the business model. ARCs in India have been subject to large regulatory changes, funding challenges and write offs which can result in uncertainty in resolution of acquired assets with respect to recovery amounts and timelines.The Indian distressed assets market is in a nascent stage with limited seasoning and is gradually developing with regulatory policies taking shape steadily. To this effect, the recommendations by RBI’s constituted committee include incentivizing quicker resolutions, price discovery, acquisition of distressed assets with a lower seasoning and enabling ARC participation in the Insolvency and Bankruptcy Code(IBC) process. RBI’s recommendations and setting up of the National Asset Reconstruction Company Limited(NARCL) to acquire Rs.2 lac crore of NPA assets from public sector banks with a Government of India guarantee of Rs.30,600 crore is likely to provide a fillip to this sector in relation to resolutions and recoveries and strengthen of overall framework for ARCs in the country.

Working of ARCs: The ARCs acquire NPAs from banks or financial institutions either through bilateral deals or auctions. After acquisition of the asset, they formulate schemes for inviting subscription to security receipts (SRs) by Qualified Institutional Buyers (QIBs) through one or more trusts set up exclusively for the purpose. Debt can be acquired either through cash alone or a mix of cash and SRs. To ensure that ARCs have more skin in the game of acquisition, they are required to invest a minimum of 15 per cent of the SRs under each scheme on an ongoing basis till the redemption of all SRs.

Following the resolution, ARCs start recovery of debt and work on the redemption of SRs. ARCs are allowed a period of five years to recover the dues. However, the period can be extended up to eight years subject to the approval of their Boards(Source: RBI)