RBI Tweaks Conditions for Sale of Asset by an ARC to Another
The Reserve Bank of India Friday permitted Asset Reconstruction Companies (ARCs) to acquire financial assets from each other on meeting certain conditions, in light of changes made in the Sarfaesi Act.
Mumbai, Jun 28 (PTI) The Reserve Bank of India Friday permitted Asset Reconstruction Companies (ARCs) to acquire financial assets from each other on meeting certain conditions, in light of changes made in the Sarfaesi Act.
The decision will help improve liquidity in the ARC market.
"In view of amendment to the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (Sarfaesi) Act, 2002, it has been decided to permit ARCs to acquire financial asset from other ARCs," RBI said in a notification.
However, the transfer of assets by one ARC to another would depend on certain conditions.
For example, the transaction has to be settled on cash basis between the ARCs.
The selling ARC will utilise the proceeds so received for the redemption of underlying security receipts, it said.
The date of redemption of underlying security receipts and total period of realisation shall not extend beyond eight years from the date of acquisition of the financial asset by the first ARC, it added.
(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)