What is Asset Reconstruction Company (ARC) ?

Definition: 
  • Asset Reconstruction Company (ARC) is a company registered under Section 3 of the Securitization and reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. 
  • ARCs are regulated by the RBI.
  • They are the specialised agencies with a main role of resolving the stressed assets issue of the Indian banking system.
  • They are involved in buying bad loans from Indian banks to turn them around. ARCs are similar to the asset management companies present in countries like Malaysia, Korea and several other countries.
  • In 1998, Narsimham Committee - II proposed  to set up of ARCs on the similar lines with that of asset management companies present globally.
  • The main advantage of ARCs is they help the banks to concentrate on normal banking operations rather than dealing with stressed assets