MUMBAI: The Reserve Bank has provided a level playing field to asset reconstruction companies (ARCs) with banks and non-banking financial companies by easing norms for settling dues payable by borrowers.
With the NCLTs becoming the better preferred choice for lenders to settle unpaid accounts, ARCs have been struggling to survive, forcing many of them to look for retail accounts, which do not go to NCLTs.
The revised norms has also done away with the criteria that required an independent advisory committee to examine proposals for settlement of borrower accounts having an aggregate value of Rs 1 crore or below.
ARCs now have a relatively free hand in settling borrower dues of up to Rs 1 crore, going by the revised guidelines on settlement of dues of borrowers by ARCs. In the case of settlement of borrower dues above Rs 1 crore, either the board or a committee of the board can take a call, RBI said on Monday. Earlier, this power was vested only with the board.
The aforementioned relaxations are expected to streamline the functioning of ARCs. When it comes to settlement of borrower accounts having aggregate value of over Rs 1 crore at the time of acquisition by an ARC, RBI said either the board or a committee of the board can deliberate on the recommendations of the of internal assessment committee. Earlier, only the board could deliberate on the recommendations of internal assessment committee.