The financial market regulator, Reserve Bank of India (RBI) on June 28, 2019 has permitted acquiring of financial assets of Asset Reconstruction Companies (ARCs) with certain conditions. The RBI has approved the scheme in the light of the amendments made in the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002, and has imposed following conditions where an ARC can acquire financial assets of another ARC:
- The transaction is settled on cash basis;
- Price discovery for such transaction shall not be prejudicial to the interest of Security Receipt holders;
- The selling ARC will utilize proceeds of sale for the redemption of underlying Security Receipts;
- Within in the period of eight years from the date of acquisition of the financial asset by the first ARC, the redemption of underlying Security Receipts must be completed.
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