RBI allows ARCs to acquire financial assets from other ARCs

Jul 04, 2019 | by Avantis RegTech Legal Research Team


The Reserve Bank of India (RBI) on June 28, 2019, has decided to permit Asset Reconstruction Companies (ARCs) to acquire financial asset from other ARCs subject to amendments made in the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 vide Circular No. DNBS (PD) CC. No. 35/SCRC/26.03.001/2013-2014 dated January 23, 2014.

The ARCs can acquire financial asset from other ARCs subject to the following conditions:

1. The transaction is settled on cash basis;

2. Price discovery for such transaction shall not be prejudicial to the interest of Security Receipt holders;

3. The selling ARC will utilize the proceeds so received for the redemption of underlying Security Receipts;

4. The date of redemption of underlying Security Receipts and total period of realisation shall not extend beyond eight years from the date of acquisition of the financial asset by the first ARC.

[Notification No. DNBR.PD (ARC) CC.No.07/26.03.001/2018-19]


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