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Sell bad debts early, let ARCs take part in IBC: RBI committee

About 80 per cent of the recovery ARCs made came through the "deployment of measures of reconstruction that do not necessarily lead to revival of businesses"

Anup Roy Mumbai

Premium

Illustration: Binay Sinha

3 min read Last Updated : Nov 03 2021 | 12:32 AM IST

A committee formed by the Reserve Bank of India (RBI) to recommend ways to revive asset reconstruction companies (ARCs) has suggested an early sale of bad debts to them, directly acquiring non-performing assets from the market, and letting ARCs bid in the insolvency and bankruptcy process.

Once an ARC acquires assets, it should be allowed to lend to the stressed assets so that they can be nursed back to health and dues recovered later on.

The committee, headed by former RBI executive director Sudarshan Sen, has suggested in its report that if 66 per cent of the lenders (by value) agree to sell an asset to ARCs, “the same may be binding on the remaining lenders and it must be implemented within 60 days of approval by majority lenders”.