27 April , 2021 Fdiindia
RBI Article Demands Monitoring Movement Of Capital Between Banks And Arcs
It might be critical to monitor the movement of funds between banks and Asset Reconstruction Companies. The observation comes in the scrim of the banks being shareholders and lenders and sell and performing assets to them. An initiative of this kind can have involvement for the genuine sale of NPAs and the overall development of the ARC Industry, stated RBI official Amarnath Yadav and Pallavi Chavan from the Department of Supervision. The author of the research focused on the personal character of ARCs that were relying on heavy borrowing, particularly from banks, as a significant source of funds. The article accentuates that the domestic sources made the capital base of the ARCs, particularly financial institutions with foreign authorities, remain weak. Private sector companies, the key shareholders of ARCs, are banks and other financial institutes. To enhance the capital base, ARCs were permitted under 100 percent FDI through automatic route in 2016. Liberalization relating to FDI, foreign organizations account for a small portion of the total capital of ARCs, the author stated.