Asset reconstruction companies (ARCs) have their genesis in the Sarfaesi Act, 2002, and corresponding Reserve Bank of India (RBI) guidelines in 2003, starting as an agency dedicated to resolving bad loans. The model was changed with the stipulation of a minimum investment of 5 per cent, which turned it into a low-capital-investment model. While ARCs geared up to raise capital to meet this stipulation, the minimum investment was tripled to 15 per cent in August 2014. This impacted the economics and raised question marks about their ability to raise funds.
However, ARCs and lenders slowly worked out appropriate pricing for
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper