ARCIL is the first asset reconstruction company in India. It is based on the banking model, where a group of banks float an Asset Reconstruction Company (ARC). It has so far acquired bad loans aggregating to Rs. 15,000 cr and has paid various sellers Rs. 3,572 cr by way of issuance of security receipts. It has acquired assets principally in sectors like textiles, pharma, consumer products and iron & steel.
The time and again systemwide clean up of NPA has resulted in the creation of Asset Reconstruction Companies (ARCs), which are either public or government-owned. ARCs act as debt aggregators and acquire NPAs, thereby separating NPAs from the banking system. ARCs perform like a bad bank, so that the banking system can function well and return to equity markets and normal banking business. Governments promote the relocation of assets to ARCs by creating a supportive environment. Governments may also make available exceptional powers to ARCs, to enable them to carry out their functions without any hindrances.
The Government of India (GoI) has proactively initiated certain measures to manage NPAs, in contrast to other economies, where ARCs have been put in place post financial crises and for the purpose of aid. |
