RBI has released Master Direction to the Asset Reconstruction Companies

Current Context: The Reserve Bank of India (RBI) has indeed released a Master Direction for Asset Reconstruction Companies (ARCs). This new direction is set to be effective from April 24, 2024.

• The Master Direction provides comprehensive guidelines and instructions for ARCs.
• It covers various aspects such as registration, net owned fund, permissible business, asset reconstruction, securitisation, capital adequacy requirements, deployment of funds, asset classification, investments, income recognition, and more.
• One of the significant changes is the increase in the minimum capital requirement for ARCs.
• It has been raised to Rs 300 crore, compared to Rs 100 crore as on October 11, 2022.
• This is a substantial increase and is likely to have significant implications for the operations of ARCs.

Question:

Q.1 What is the new minimum capital requirement for ARCs as per the new Master Direction?
a. Rs 100 crore
b. Rs 200 crore
c. Rs 300 crore
d. Rs 400 crore