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How to reconstruct asset reconstruction companies

Banks feel happy shifting their toxic assets from loan books to investment books, while the ARCs are enjoying the management fees with a smile. Let's break the cosy relationship

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Tamal Bandyopadhyay New Delhi
The Reserve Bank of India (RBI) panel, undertaking “a comprehensive review” of the working of the asset reconstruction companies (ARCs), has invited views and suggestions from market participants and other stakeholders. I don’t belong to either group but let me make a few observations.

The ARCs are in the business of buying bad loans from banks and financial institutions and making money by recovering them. Generally, they acquire the bad financial assets using a trust structure; they do not own the assets but manage them.

Their origin is a 1991 report on financial sector reforms by a panel chaired by former RBI
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

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First Published: May 16 2021 | 10:35 PM IST

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