The Reserve Bank of India (RBI) has said the committee on Asset Reconstruction Companies (ARCs) has invited views and suggestions from market participants and other stakeholders. The RBI on April 7 announced the setting up of a committee to undertake a comprehensive review of the working of ARCs in the financial sector ecosystem.
The committee has been tasked to recommend suitable measures for enabling such entities to meet the growing requirements of the financial sector. On April 19, the RBI said the panel will be formed under the chairmanship of former RBI executive director Sudarshan Sen.
As per the RBI, the committee will review existing legal and regulatory framework applicable to ARCs and recommend measures to improve their efficacy. It'll also review the role of ARCs in resolution of stressed assets, including under Insolvency & Bankruptcy Code (IBC), 2016. The committee will also suggest ways to improve liquidity in and trading of security receipts. Apart from reviewing the business models of the ARCs, it'll also advise matters relevant to their functioning, transparency and governance.
RBI Governor Shaktikanta Das had announced after the monetary policy committee meeting earlier this month that such a panel was in the works. Other members on the panel include Vishakha Mulye, Executive Director, ICICI Bank; P N Prasad, former Dy Managing Director, SBI; Rohit Prasad, Professor of Economics, MDI, Gurgaon; Abizer Diwanji, Partner, Ernst & Young; and R Anand, Chartered Accountant. The Committee will submit its report within three months from the date of its first meeting.
After enactment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act in 2002, regulatory guidelines for ARCs were issued in 2003 to enable development of this sector and to facilitate smooth functioning of these companies. Since then, ARCs have grown in number and size but their potential for resolving stressed assets is yet to be realised fully, RBI Governor Das had said while announcing the first bi-monthly monetary policy for the current financial year on April 7.
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