The Telegraph
Sunday , August 10 , 2014
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ARCs cautious

Calcutta, Aug. 9: Ratings agency Crisil expects to see a moderation in the growth of assets under management (AUM) of asset restructuring companies in India in the 12-month period ending June 2015.

The total AUM of these companies has seen a four-fold jump in the 12 months between June 2013 and June 2014 to reach Rs 42,000 crore. However, the growth is expected to moderate to 30 per cent on the back of amendments announced by the Reserve Bank of India to The Securitisation Companies and Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003, on August 5.

Asset restructuring companies (ARC) are specialised institutions regulated by the RBI. They purchase and recover non-performing assets of banks and financial institutions. ARCs form a trust and issue security receipts based on the bad loans acquired from banks. They charge a fee for the recovery process.

The RBI has raised the minimum investment by ARCs in security receipts issued by them to 15 per cent from the earlier 5 per cent.