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Asset Reconstruction Companies (ARCs) are specialized financial institutions that play a critical role in resolving stressed assets in the Indian banking system. By acquiring non-performing assets (NPAs) from banks and financial institutions and restructuring or recovering them, ARCs help clean up bank balance sheets, unlock trapped capital, and support the broader credit ecosystem.
ARCs in India are registered and regulated by the Reserve Bank of India under the SARFAESI Act, 2002 and detailed RBI Master Directions. They require a minimum Net Owned Funds of ₹300 crore, robust governance, and strong operational capability to acquire, hold, manage, and resolve financial assets — making ARC registration one of the most specialized RBI approvals in the Indian financial sector.
We provide end-to-end advisory for setting up an Asset Reconstruction Company — from structuring the entity and promoters, building the business plan and policies, filing the RBI application, responding to queries, and supporting post-registration compliance, SARFAESI-specific operations, and fundraising.
₹300 Cr
Minimum Net Owned Funds
15%
Minimum CRAR requirement
SARFAESI
Act, 2002 & RBI MD
6-9
Months typical timeline
Regulations & Frameworks We Align With
SARFAESI Act, 2002
RBI Act, 1934
ARC Master Directions
Companies Act, 2013
IBC, 2016
FEMA & FDI Policy
SEBI Regulations
PMLA
Our ARC Registration & Advisory Services
Structuring & Strategy
Advisory on entity structure, promoter mix, capital plan, and long-term business strategy.
Company Incorporation
Incorporation of a company under the Companies Act, 2013 with ARC-compliant objects.
Capital Planning
Structuring the ₹300 crore NOF, capital raise strategy, and promoter contribution plan.
Business Plan & Projections
Detailed 5-year business plan covering asset acquisition, resolution, and revenue model.
Policies & Frameworks
Acquisition, resolution, valuation, SR, risk, KYC/AML, IT/IS, and governance policies.
RBI Application
Preparation and filing of CoR application with RBI along with all supporting documentation.
Fit & Proper & Diligence
Promoter and director due diligence, Fit & Proper documentation, and representations.
Post-Registration Support
SARFAESI operations setup, trust / scheme structuring, RBI returns, and ongoing compliance.
Permissible ARC Business Activities
Core
Acquisition of Financial Assets
Acquiring stressed financial assets from banks and FIs through assignment.
Core
Asset Reconstruction
Rehabilitation, restructuring, and reorganization of acquired stressed loans.
Core
Securitization
Issue of Security Receipts (SRs) backed by pools of acquired financial assets.
Recovery
SARFAESI Enforcement
Enforcement of security interest under the SARFAESI Act for recovery of dues.
Resolution
Settlement & OTS
Negotiated settlements, one-time settlements, and restructuring of borrower dues.
IBC
Role as Resolution Applicant
Acting as a Resolution Applicant under the Insolvency and Bankruptcy Code.
Advisory
Management & Advisory
Managing acquired assets and providing NPA resolution advisory services.
Investment
Investment in SRs
Investing in SRs of its own trusts and managing associated trust schemes.
Key Eligibility Requirements
Registered Company
Must be a company incorporated under the Companies Act, 2013.
Net Owned Funds
Minimum NOF of ₹300 crore, verified through auditor & banker certification.
Capital Adequacy
Maintain minimum CRAR of 15% on ongoing basis as per RBI ARC directions.
Fit & Proper Criteria
Promoters and directors must meet RBI’s stringent Fit and Proper Criteria.
Experienced Leadership
Board and management with relevant banking, lending, or recovery experience.
Credible Business Plan
Clear acquisition, resolution, and SR strategy with strong governance framework.
Documents Required
Company & Corporate
- Certificate of Incorporation
- MOA & AOA with ARC objects
- Board resolution for ARC registration
- Shareholding pattern
- Audited financials (if applicable)
- NOF certificate & banker’s report
Promoters & Directors
- KYC of promoters & directors
- Source of funds declaration
- Net worth certificates
- Fit & Proper declaration
- CIBIL / credit history reports
- Experience in banking / finance
Business Plan & Policies
- Detailed 5-year business plan
- Financial projections
- Asset acquisition & resolution policy
- SR issuance & valuation framework
- KYC / AML / PMLA policy
- IT / IS & governance framework
ARC Registration Process
1
Structuring
Design entity, promoter structure, capital plan, and target business model.
2
Incorporation
Incorporate the company with ARC-specific objects in the MOA.
3
Capital & Policies
Infuse NOF, obtain certification, and prepare policies, business plan, and frameworks.
4
RBI Filing
File application with the Reserve Bank of India along with all required attachments.
5
CoR Grant
Respond to RBI queries and supervisory review until Certificate of Registration is granted.
Why Set Up an Asset Reconstruction Company
✓
Participate in India’s large stressed assets market
✓
Strong regulatory credibility as an RBI-registered ARC
✓
Access SARFAESI enforcement powers for recovery
✓
Act as Resolution Applicant under IBC process
✓
Issue Security Receipts to institutional investors
✓
Attract PE, strategic, and cross-border investors
✓
Partner with banks & FIs to clean stressed books
✓
Play a systemic role in credit ecosystem resolution
Ongoing Compliance for ARCs
CRAR & Leverage
Maintain minimum CRAR of 15% and leverage limits as per RBI directions.
NOF Maintenance
Continuously maintain minimum Net Owned Funds of ₹300 crore.
RBI Returns
Periodic returns on acquisitions, SRs, resolution status, and financials.
SR Valuation & Rating
Periodic valuation and credit rating of Security Receipts per RBI norms.
Trust Structure Compliance
Separate trusts per scheme, independent trustees, and scheme-level disclosures.
SARFAESI & IBC
Compliance with SARFAESI enforcement and IBC processes as applicable.
Corporate Governance
Board structure, committees, and RBI-mandated governance standards.
Statutory Audit & Tax
Annual statutory audit, MCA filings, income tax, GST, and transfer pricing.
FAQs on ARC Registration
What is an Asset Reconstruction Company (ARC)?
An Asset Reconstruction Company is a specialized financial institution registered with the Reserve Bank of India under the SARFAESI Act, 2002. ARCs acquire stressed financial assets — typically non-performing loans — from banks and financial institutions, and work on their resolution through restructuring, settlement, enforcement, or sale, often funded by issuance of Security Receipts (SRs).
What is the minimum capital required for an ARC?
An ARC must have a minimum Net Owned Funds (NOF) of ₹300 crore, to be maintained at all times. In addition, ARCs are required to maintain a minimum Capital Adequacy Ratio (CRAR) of 15% on an ongoing basis as per applicable RBI directions.
Who regulates ARCs in India?
ARCs are regulated by the Reserve Bank of India under the SARFAESI Act, 2002 and the RBI’s Master Directions on Asset Reconstruction Companies. They are also governed by the Companies Act, 2013, and, where applicable, by FEMA, SEBI, and tax laws.
What business activities can an ARC undertake?
Core activities include acquisition of financial assets, reconstruction and restructuring, securitization through Security Receipts, enforcement of security interest under SARFAESI, settlement / OTS, investment in SRs of their own trusts, acting as Resolution Applicant under IBC, and providing NPA management and advisory services.
What are Security Receipts (SRs)?
Security Receipts are instruments issued by an ARC to Qualified Buyers, representing undivided interest in a pool of acquired stressed financial assets. SRs are typically issued through separate trusts / schemes, carry a rating, and their value depends on the realizations from the underlying stressed assets.
Can foreign investors invest in ARCs?
Yes. Subject to the extant FDI policy and FEMA regulations, foreign investment is permitted in ARCs under specified conditions and caps, including in capital and SRs. The specific route (automatic / approval) and sectoral caps need to be evaluated based on the latest applicable rules at the time of the transaction.
How long does ARC registration take?
A well-prepared ARC registration typically takes 6 to 9 months from filing to grant of CoR, depending on completeness of documentation, promoter background, depth of the business plan, and RBI’s queries. Capital structuring, policies, and Fit & Proper documentation often drive the timeline.
Can an ARC start operations before receiving the CoR?
No. A company cannot carry on the business of asset reconstruction or securitization without a valid Certificate of Registration from the Reserve Bank of India. Undertaking ARC activities without CoR is a violation of the SARFAESI Act and the RBI Act, attracting significant penalties and enforcement action.
Build an RBI-Registered Asset Reconstruction Company
Partner with our specialists for end-to-end ARC advisory — structuring, capital planning, RBI registration, and SARFAESI-compliant operations, all under one roof.
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