RCI facilitates in the take over of stressed account through ARC or NBFC .We also invest in stressed assets through other QIB channel partners.We also facilitate funding for purchase of stressed assets through NCLT for plan approval.We also facilitate OTS funding
Asset Reconstruction Companies (ARCs) play a crucial role in the financial ecosystem by acquiring and resolving non-performing assets (NPAs) from banks and other lending institutions.
The ability to efficiently access capital is paramount for ARCs, as the acquisition and turnaround of NPAs requires substantial resources and patience. By deploying a range of funding mechanisms, these companies can scale their operations, diversify their portfolios, and maximize the recovery value of distressed assets - ultimately benefiting the broader financial system through the restoration of performing loans and the freeing up of capital for further lending. The intricate web of acquisition financing is thus a critical component in the ARC's toolkit for tackling India's persistent NPA challenge.
Funding the acquisition of Non-Performing Assets (NPAs) by Asset Reconstruction Companies (ARCs) involves several key steps.
Here's a detailed overview of the process:
1-Initial Assessment and Due Diligence: Conduct a thorough assessment of the NPAs to acquire. This includes evaluating the financial health of the borrower, the value of the collateral, and the potential for recovery.
2-Valuation and Pricing: Based on the assessment, determine the fair value of the NPAs. This involves negotiations with the selling bank to agree on a purchase price.
3-Equity Funding: Raise equity from investors, including banks, financial institutions, and private equity firms.
4-Debt Funding: Secure loans or issue bonds to finance the acquisition. These funds are typically secured against the acquired assets.
5-Securitization: Pool the acquired NPAs and issue securities backed by these assets to raise additional funds.
6-Acquisition and Transfer: Once funding is secured, proceed with the acquisition. The NPAs are transferred from the selling bank to the ARC, and the agreed purchase price is paid.
7-Resolution and Recovery: Implement strategies to recover the value from the acquired NPAs. This can include restructuring the debt, selling the collateral, or initiating legal proceedings if necessary.
8-Monitoring and Reporting: Continuous monitoring of the acquired NPAs is essential to track recovery progress. This helps ARCs manage and recover value from distressed assets, contributing to the overall stability of the financial system.
