Tighter ARC regulations to spawn consolidation: CRISIL


By Accommodation Times Bureau

Bigger players resilient to evolving regulatory environment

CRISIL believes the Reserve Bank of India’s (RBI) recent proposal to increase net owned funds to Rs 100 crore (from Rs 2 crore) for asset reconstruction companies (ARCs) is among the series of steps taken to strengthen the ecosystem that will attract players with deep pockets, enhance transparency in transactions, improve recoveries and open up scope for consolidation.

Given the thicket of rule changes, larger ARCs would be on a firmer footing, especially those backed by strong promoter groups with the ability and intent to infuse capital, and relatively better capability to attract capital from external sources, given that 100% foreign direct investment is permitted in the sector.

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