Acquisition of financial assets by Asset Reconstruction Companies from sponsors and lenders - RBI - RBI/2019-2020/110 DOR.NBFC(ARC) CC. No. 8/26.03.001/2019-20

RBI/2019-20/110 DOR.NBFC(ARC) CC. No. 8/26.03.001/2019-20 December 6, 2019 All Asset Reconstruction Companies Madam/ Sir, Acquisition of financial assets by Asset Reconstruction Companies from sponsors and lenders Please refer to para 2(A) of Circular DNBS (PD) CC.No.37/SCRC/26.03.001/2013-2014 dated March 19, 2014. 2. On a review, it has been decided that Asset Reconstruction Companies (ARCs) shall not acquire financial assets from the following on a bilateral basis, whatever may be the consideration: (i) a bank/ financial institution which is the sponsor of the ARC; (ii) a bank/ financial institution which is either a lender to the ARC or a subscriber to the fund, if any, raised by the ARC for its operations; (iii) an entity in the group to which the ARC belongs. However, they may participate in auctions of the financial assets provided such auctions are conducted in a transparent manner, on arm s length basis and the prices are determined by market forces. Yours faithfully, (Manoranjan Mishra) Chief General Manager