RBI allows strong ARCs to hold more than 26% in sick units

ARC should be in compliance with net owned fund requirement of Rs 100 crore on an ongoing basis

In a major boost to the asset reconstruction companies (ARCs) the Reserve Bank today relaxed norms capping their shareholdings at 26% in the borrower firm under reconstruction, provided their net-owned funds are maintained at Rs 100 crore.
 

Earlier ARCs could convert a portion of the debt into equity of the borrower company to the extent of 26% of the revamped equity capital.

However, RBI in a notification today said, "ARCs with net owned fund (NOF) of Rs 100 crore on an ongoing basis are exempted from the shareholding cap at 26% of post- converted equity of the borrower company".

But