By Accommodation Times Bureau
Assets reconstruction companies are established under RBI’s license to reconstruct and repurchase NPAs from Banks and NBFC. These companies are allowed to purchase Non performing Assets (NPA) from financial institutions. They can acquire such assets by just paying a margin money of 15% of the book value of NPA with such banks.
Many financial institutions and banks have floated such Assets reconstruction companies to park their NPA and clean their Balance Sheet. Not only cleaning the balance sheet but cartel with top management of such banks to manupulate and discount such NPA and sell to group of preferred people. The Reserve Price kept on such high value above market price so that no one bid in public auction. After three auction, such properties are sold on first come first serve basis on huge discount.
Assets Reconstruction Companies are nothing but a front face of Banks and financial institutions to manipulate NPA and clean their balance sheet.