RBI eases rules for ARCs in debt recovery cases
ARCs will now be allowed to hold longer maturity securities in the stressed accounts they acquire from banks.
May 08, 2015 / 11:02 AM IST
The central bank Reserve Bank of India (RBI) has introduced more flexibility in rules for asset reconstruction companies (ARCs) in debt recovery cases.
ARCs will now be allowed to hold longer maturity securities in the stressed accounts they acquire from banks. Earlier, the maximum resolution period permitted for realization of stressed assets acquired by them was 8 years, but in most cases of restructuring, the repayment period often went beyond the 8 year time frame, thereby jeopardizing the restructuring efforts of the majority lenders.
Keeping in mind this constraint, the RBI today said ARCs may hold security receipts against such assets for a longer period. This will be subject to independent credit rating agencies continuing to positively rate these security receipts.