Asset Reconstruction Companies (ARCs)

Asset Reconstruction Companies (ARCs)

An Asset Reconstruction Company is a specialized financial institution, registered under RBI, which buys the NPAs or bad loans from banks with the object of recovering the stressed assets. The bad loans are bought by the ARCs at a fair price from the banks along with all the attached rights. No ARC can commence the business of securitisation or asset reconstruction without having Net Owned Fund of less than Rs 2 crore. An ARC normally raises its funding requirements from Qualified Institutional Buyers (QIBs) such as Insurance companies and  Financial Institutions, through issue of bonds, debentures and security receipts.