The Reserve Bank of India (RBI) on Wednesday launched a ‘Master Direction’ for Asset Reconstruction Companies (ARCs) mandating them to maintain a minimal net owned fund (NOF) of ₹300 crore in a phased method by FY26.
The Master Direction got here into impact April 24, 2024. “To commence the business of securitisation or asset reconstruction, an ARC is required to have a minimum net owned fund (NOF) of ₹300 crore and thereafter, on an ongoing basis,” the RBI stated.
ARCs in existence since October 11, 2022, have been supplied a glide path to obtain the minimal NOF of ₹300 crore.
This meant that they maintain a minimal NOF of ₹100 crore as on October 2022, ₹200 crore by March 31, 2024, and ₹300 crore by March 31, 2026.
If the ARC fails to comply, it “shall be subject to supervisory action, including prohibition on undertaking incremental business till it reaches the required minimum NOF applicable at that time,” the RBI stated.
An ARC shall undertake solely securitisation and asset reconstruction actions and features supplied underneath Section 10 of the Act, the RBI stated.
But ARCs with a minimal NOF of ₹1,000 crore are eligible to perform as Resolution Applicants underneath the IBC, it added.
