FinMin group submits report on ARCs, policy changes likely

Saikat Das
Moneycontrol.com

A high-powered advisory committee headed by Alok Nigam, joint secretary in the department of financial services has recently submitted its recommendations on policy changes for Asset Reconstruction Companies (ARCs), which have not gained momentum even 10 years on since inception. Moneycontrol.com has a copy of this report. The Reserve Bank of India (RBI) and the central government has to now decide on the report.
Some of the key recommendations of the report include issuing suitable guidelines on NPA auction sale and price discovery, permission to acquire debt from other ARCs, gradual write off (amortization) of loss on sale of NPAs to ARCs, regulatory approval for enabling NBFCs to sell NPAs to ARCs to broaden the market, empowering the ARCs to convert debt acquired by them from banks into equity of the defaulting company by way of a new contract subject to regulatory guidelines, facilitating exercise of power to take-over code management for the sale of the business of the borrower, uniform accounting standard at ARCs and allowing ARCs to go public.