The Reserve Bank of India on 16th July 2020 has advised Asset Reconstruction Companies(ARC) registered with the Bank to adopt ‘Fair Practices Code’ to ensure transparency and fairness in their operation and to follow transparent and non-discriminatory practices in acquisition of assets. It shall maintain arm’s length distance in the pursuit of transparency and in order to enhance transparency in the process of the sale of secured assets, an invitation for participation in auctions shall be publicly solicited and the process should enable participation of as many prospective buyers as possible. The terms and conditions of such sale may be decided in wider consultation with investors in the security receipts as per the SARFAESI Act 2002 and the spirit of Section 29A of the Insolvency and Bankruptcy Code, 2016 may be followed in dealing with prospective buyers.
As per the guidelines regarding FPC, ARCs should release all securities on repayment of dues or on the realization of the outstanding amount of loan, subject to any legitimate right or lien for any other claim they may have against the borrower.
Further, the Asset Reconstruction Companies shall constitute a Grievance Redressal Machinery within the organization. The name and contact number of designated grievance redressal officer of the ARC should be mentioned in the communication with the borrowers. The designated officer should ensure that genuine grievances are redressed promptly. ARCs’ Grievance Redressal Machinery will also deal with the issue relating to services provided by the outsourced agency and recovery agents, if any.
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