RBI to raise minimum capital requirement to set up ARCs

Published on October 11, 2022
Current Context: Reserve Bank of India has raised the minimum capital requirement for setting up an Asset Reconstruction Company (ARC) to Rs. 300 cr.
RBI to raise minimum capital requirement to set up ARCs
  • The existing ARCs will be required to meet the minimum net owned fund requirement of Rs. 200 crores.
  • This is needed to be done by March 31, 2024, and to an amount of Rs. 300 crores by March 31, 2026.
  • The decision is aimed at improving the securitization of the sector.
  • It will also play an important role in the management of distressed financial assets.
  • Under section 10 (2) of the SARFAESI Act, 2002 RBI has also been permitted to undertake those activities as a resolution applicant under IBC, 2016.

Question:

Q.1 What is the new minimum requirement for setting up an ARC?
a. Rs. 150 crore
b. Rs. 250 crore
c. Rs. 300 crore
d. Rs. 400 crore

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