RBI says ARCs must have minimum NOF of Rs100 crore by 2019

Existing asset reconstruction companies (ARCs) not meeting the Minimum NOF criteria should have a corpus of Rs100 crore latest by 31 March 2019


As per the amended Sarfaesi Act, no ARC can commence or carry on the business without having NOF of not less than Rs2 crore or such other higher amount as the RBI may specify. Photo: Danish Siddiqui/Reuters
As per the amended Sarfaesi Act, no ARC can commence or carry on the business without having NOF of not less than Rs2 crore or such other higher amount as the RBI may specify. Photo: Danish Siddiqui/Reuters

Mumbai: The Reserve Bank of India (RBI) on Friday said all the existing asset reconstruction companies (ARCs) must have a minimum corpus of Rs100 crore by March 2019.

The government as well as RBI have envisaged a greater role for ARCs in resolving the stressed assets issue of the Indian banking system. These companies are in the business of buying bad loans from banks to turn them around.

In a notification, RBI said that it “has been decided to fix the minimum net owned fund (NOF) requirement for ARCs at Rs100 crore on an ongoing basis”.

As per amended Sarfaesi Act, 2016, no ARC can commence or carry on the business of securitisation or asset reconstruction without having net owned fund of not less than Rs2 crore or such other higher amount as the RBI may, by notification, specify.

Today’s RBI notification said the existing ARCs not meeting the minimum NOF criteria have been asked by RBI to achieve the minimum NOF of Rs100 crore latest by 31 March 2019.

In its last bi-monthly monetary policy, RBI had proposed to stipulate a minimum NOF of Rs100 crore for ARCs in view of their enhanced role and greater cash based transactions.

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