Robust governance pre-requisite to ensuring that ARCs fulfill their intended mandate

Swaminathan J, Deputy Governor of the Reserve Bank of India noted in a speech at the Conference of Asset Reconstruction Companies (ARCs) that robust governance led by the Board is a pre-requisite to ensuring that ARCs fulfill their intended mandate. Effective functioning of the board requires several elements including competent leadership, committed directors with diverse expertise, independence, clarity in roles and responsibilities and diligence. ARCs potential for resolving stressed assets within the system can only be realised with sound governance and adherence to ethical practices by a responsible ownership and a professional management. He opined that ARCs enjoy a special place in the financial eco system by being the special purpose vehicles set up to help lighten the banking system from the high value NPAs and release the management bandwidth to the lenders for continuing with their normal banking activities.

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