The Reserve Bank of India (RBI) has set up a six-member panel under the chairmanship of Sudarshan Sen, former RBI executive director, for reviewing the role of asset reconstruction companies (ARCs) in stressed debt resolution, included under the Insolvency & Bankruptcy Code (IBC), 2016 and review their business model.
The committee will be reviewing the legal and regulatory framework of ARCs and suggest measures for improving their efficiency. It will be submitting its report within three months from the date of its first meeting. As of January-end 2021, total 28 ARCs are registered with the RBI.
Other members of the 6-member 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 suggest ways to improve liquidity in and trading of security receipt
As per RBI data, the book value of assets needed 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,” said RBI governor Shaktikanta Das.