The Reserve Bank of India constituted committee on Asset Reconstruction Companies (ARCs) has invited ARCs, market participants and other stakeholders to share their views and suggestions on the issue of working of such companies.
The committee, headed by Sudarshan Sen, former Executive Director, RBI, has given time till May 31, for receiving all the views and suggestions before it finalises its recommendations.
As part of the Statement on Developmental and Regulatory Policies released along with the Monetary Policy Statement on April 7, the RBI had announced setting up of a Committee to undertake a comprehensive review of the working of ARCs in the financial sector ecosystem and recommend suitable measures for enabling such entities to meet the growing requirements of the financial sector.
Accordingly, the Committee under the chairmanship of Sen was constituted. The main objective of the committee is to review existing legal and regulatory framework applicable to ARCs and recommend measures to improve efficacy of ARCs.
It will also review the role of ARCs in resolution of stressed assets including under the Insolvency and Bankruptcy Code and also suggest ways for improving liquidity in and trading of security receipts.
The terms of reference of the committee also included a review of business models of the ARCs and other matters relevant to the functioning, transparency and governance of ARCs.
After enactment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act in 2002, regulatory guidelines for Asset Reconstruction Companies (ARCs) were issued in 2003 to enable development of this sector and to facilitate their smooth functioning.