With an aim to acquire distressed assets in infrastructure and real estate, Adani Group has applied for a licence from the Reserve Bank of India (RBI) to open an asset reconstruction company (ARC), reported LiveMint on November 4.
"The plan has been in the making for at least eight months, and the application was filed earlier this year. The group is waiting for the nod from RBI," Mint quoted a source as saying. It added, by quoting another source, that the ARC will buy bad loans in distressed entities where the group has a strategic interest.
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Adani Group's non-banking financial company (NBFC) -- Adani Capital -- is allowed to purchase bad loans under RBI norms. Despite this, the firm is mulling to set up special purpose vehicles for buying NPAs as most bad assets on sale are bought by ARCs. Reason being, if NBFCs are used to purchase NPAs, it may lead to the accumulation of NPAs in its book.
Earlier too, Adani group significantly acquired distressed assets in infrastructure, specifically ports. In February, Adani Ports and Special Economic Zones Ltd (APSEZ) -- its flagship firm -- acquired Dighi Port Ltd under the Insolvency and Bankruptcy Code for Rs 705 crore, while in 2021 it bought Krishnapatnam and Gangawaram ports. Apart from this, Adani Ports now controls 30 percent of India’s port traffic.
Also, the Adani Group acquired a controlling stake in Mumbai International Airport Ltd (MIAL). Among other things, the Adani group was one of the bidders for Dewan Housing Finance Corp. Ltd (DHFL) under IBC.
RBI committee on November 2 released a report, proposing to allow ARCs to act as resolution applicants in the IBC process. This may act as a positive for the Adani group’s ARC if it is approved.