What is Asset Reconstruction Company Registration?
Functions of Asset Reconstruction Company
1)Acquisition of Financial Assets (as defined u/s 2(L) of the SARFAESI Act, 2002.
2)Change or takeover of management/ sale or lease of business of the borrower.
3)Rescheduling of debts.
4)Enforcement of security interest (as defined under section 13(4) of SARFAESI Act, 2002)
Without obtaining a registration certificate
1)Having net owned funds of not less than two crore Rupees or such other amount not exceeding fifteen percent of total financial assets acquired or to be acquired by by the securitization company or reconstruction company, as the Reserve Bank by notification specify.
2)Reserve Bank of India may by notification specify amount of net owned funds for different class or classes of securitization companies or reconstruction companies.
-Such reconstruction company has made adequate arrangements for realization of the financial assets acquired for the purpose of asset reconstruction and shall be able to pay periodical returns and redeem on the investments on respective due dates made in company by qualified institutional buyers or other persons.
-Directors of the Reconstruction company should be experienced professional in the field of finance, securitization and reconstruction.
-Board of Directors of such reconstruction company do not consist more than half of its total number of Directors or are either nominees of any sponsor or associated in any manner with the sponsor or any of its subsidiaries.
-Directors should be convicted of any offence involving moral turpitude.
-Sponsor must not be directly related with the securitization or reconstruction company and should not be holding any controlling interest.
-Such companies must have complied with or is in a position to comply with prudential norms specified by the RBI.
RBI may after being satisfied with the condition specified in section 3 are fulfilled, grant a certificate of registration to the securitization and reconstruction company.
The RBI may reject the application, the applicant shall be given a reasonable opportunity of being heard before rejecting of the application.
Evry company shall obtain a prior approval from RBI for any substantial change in its management or change of location of its registered office or change in its name.
Provided that the decision of the Reserve Bank of India will be final.