NEW DELHI: The Reserve Bank of India (RBI) has formed a six-member panel under the chairmanship of Sudarshan Sen, former RBI executive director, to examine the role of asset reconstruction companies (ARCs) in stressed debt resolution, including under the Insolvency & Bankruptcy Code (IBC), 2016 and
review their business model.
The committee will review the legal and regulatory framework of ARCs and recommend measures to improve their efficacy. It will submit its report within three months from the date of its first meeting. As of January-end 2021, the number of ARCs registered with the RBI stood at 28.
Other members of the committee are ICICI executive director Vishakha Mulye, former SBI DMD PN Prasad, EY partner Abizer Diwanji, MDI professor of economics Rohit Prasad and chartered accountant R Anand. The committee will make suggestions for improving liquidity in and trading of security receipt According to RBI data, the book value of assets acquired by ARCs stood at Rs 4,31,339 crore and the security receipts issued by them was Rs 1,51,435 crore as of March-end 2020. The amount of security receipts completely redeemed was Rs 17,947 crore.
RBI had announced a review of ARC regulations in its April monetary policy review. “Asset reconstruction companies play an important role in the resolution of stressed assets. Their potential however is yet to be fully realized,” RBI governor Shaktikanta Das had said.