CURRENT AFFAIRS

Detailed explanation-1: -It is regulated by the Reserve Bank of India as a Non-Banking Financial Company (u/s 45I (f) (iii) of RBI Act, 1934). RBI has exempted ARCs from the compliances under section 45-IA, 45-IB, and 45-IC of the Reserve Bank Act, 1934. ARC functions like an AMC within the guidelines issued by RBI.

Detailed explanation-2: -RBI raises Minimum Capital Requirement for setting up Asset Reconstruction Company(ARC) to Rs 300 cr. The Reserve Bank raised the minimum capital requirement for setting up an asset reconstruction company (ARC) to Rs 300 crore from the existing Rs 100 crore.

Detailed explanation-3: -Review of Regulatory Framework for Asset Reconstruction Companies (ARCs) ARCs play a vital role in the management of distressed financial assets of banks and financial institutions. Considering their critical role, a need was felt to review their functioning and operating framework.

Detailed explanation-4: -1. The Committee on Banking Sector Reforms of 1991 (Narasimham Committee I) had envisaged an asset management company (AMC) like structure, namely an Asset Reconstruction Fund (ARF) to address the NPA crisis of that time.