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7
April 2017
The
Reserve Bank of India (RBI) has raised the capital requirement for asset
reconstruction companies (ARCs) to Rs 100 crore, from the current Rs 2 crore,
it has announced.
This
move was necessitated by the higher amount of cash required to buy bad loans
from the current fiscal, RBI said in note accompanying its first bi-monthly
monetary policy statement of the current fiscal presented here on Thursday. The Total Investment & Insurance
Solutions
The
enhancement in capital requirements comes after new norms notified by the RBI
in September last said if security receipts (SRs) make more than 50 per cent of
the value of the asset under consideration, banks have to continue to provide
for these loans as if the loans continue in the books of the bank.
These
norms were aimed at forcing banks to sell more such non-performing assets
(NPAs), or bad loans, at cash. The Total
Investment & Insurance Solutions
"In
view of the enhanced role of ARCs and greater cash-based transactions, it is
proposed to stipulate a minimum NOF (Net Owned Fund) of Rs 100 crore for ARCs.
The necessary instructions will be issued by end-April, 2017," the RBI
said.The Total Investment &
Insurance Solutions
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