Alchemist Asset Reconstruction Company Limited
   
ARC framework

License by RBI
ARCs are formed to acquire non performing loans from banks and financial institutions with the objective of unlocking the value in the delinquent assets and optimizing the recovery. The word asset reconstruction company is an Indian term - the global equivalent being the Asset Management Companies. The Government of India enacted the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFAESI Act) to regulate securitisation and reconstruction of financial assets and enforcement of Security Interest and for matters connected with asset reconstruction. The Act provides for setting up of Securitisation Companies / Reconstruction Companies (SC/RC) termed in popular parlance as ARCs. ARCs are Securitization Company (SC) or Reconstruction Company (RC) registered under the Companies Act, 1956. A SC/RC can commence or carry on business of Securitisation Company / Reconstruction Company only upon obtaining certificate of registration from Reserve Bank of India. RBI issues various circulars, guidelines and notifications pertaining to SC/RCs from time to time.

Structure of an Asset Reconstruction Company
Provisions have been laid down in the SARFAESI Act, 2002, under which an ARC can acquire NPAs from banks, financial institutions and HFCs. For the purpose of the said acquisition an ARC may raise funds from Qualified Institutional Buyers (QIBs) through issuance of Security Receipts representing undivided interest in the financial assets so acquired. ARCs can also function as resolution agents of Banks and Financial Institutions and resolve their NPAs for agreed upon fee/consideration.

 

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