RBI to raise minimum capital requirement to set up ARCs

Current Context: Reserve Bank of India has raised the minimum capital requirement for setting up an Asset Reconstruction Company (ARC) to Rs. 300 cr.

• 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