85 breached
The Indian rupee has breached the significant psychological barrier of 85 against the US dollar, marking an all-time low amid a confluence of domestic and global pressures.
In a significant move, the Reserve Bank of India (RBI) on Wednesday released a compiled master direction for the asset reconstruction companies (ARCs). It raised the minimum capital requirement to begin securitisation to Rs 300 crore from Rs 100 crore as on October 11, 2022.
The RBI said that the regulation would be effective from April 24, 2024. ARCs, as on October 11, 2022, have been provided a glide path to achieve the minimum required Net Owned Fund (NOF) of Rs 300 crore.
Advertisement
These Directions have been issued in exercise of the powers conferred by Sections 3, 9, 10, 12 and 12A of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002).
Advertisement
ARCs must have Rs 200 crore by March 31, 2024 and Rs 300 crore by March 31, 2026.
“In case of non-compliance at any of the above stages, the non-complying ARC shall be subject to supervisory action, including prohibition on undertaking incremental business till it reaches the required minimum NOF applicable at that time,” said the RBI.
ARCs with a minimum NOF of Rs 1,000 crore can act as resolution applicants.
ARCs may deploy funds for undertaking restructuring of acquired loan account with the sole purpose of realising dues in government securities and deposits with scheduled commercial banks, Small Industries Development Bank of India (SIDBI), National Bank for Agriculture and Rural Development (NABARD) or such other entity as may be specified by the RBI.
They can also invest in short-term instruments like money market mutual funds, certificates of deposit and corporate bonds/ commercial papers that have a short-term rating equivalent to the long-term rating of AA or above by an eligible credit rating agency (CRA).
Advertisement
