Legal UpdatesRBI

RBI permits ARCs to acquire financial asset from other ARCs on 4 conditions

RBI Updates

RBI permits Asset Reconstruction Companies (ARCs) to acquire financial asset from other ARCs. This decision has been taken in view of amendment to the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002. Hence, on the following conditions RBI permit ARCs to acquire financial asset from other ARCs:
  1. The transaction is settled on cash basis;
  2. Price discovery for such transaction shall not be prejudicial to the interest of Security Receipt holders;
  3. The selling ARC will utilize the proceeds so received for the redemption of underlying Security Receipts;
  4. 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.
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