Asset Reconstruction Companies

Asset Reconstruction Companies

Asset Reconstruction Companies (ARCs) are specialized financial institutions that deal with Non-Performing Assets (NPAs) in the banking sector. They acquire and manage distressed assets from banks and financial institutions, and try to recover the maximum value from these assets. The SARFAESI Act, 2002 provides the legal basis for ARCs. Under the SARFAESI Act, ARCs have the following powers: They can acquire NPAs from banks and financial institutions through securitization or by taking possession of the underlying assets. They can sell the acquired assets, either as a whole or in parts. They can also restructure the acquired assets to make them more saleable. ARCs play an important role in cleaning up the balance sheets of banks and financial institutions. By acquiring NPAs, they help banks to free up capital and focus on their core banking activities. ARCs also help to recover some value from NPAs that would otherwise be written off as losses. The government has also set up a new Asset Rec…