Asset Reconstruction Company (ARC) Registration in India allows entities to acquire and resolve Non-Performing Assets (NPAs) from banks and financial institutions. ARCs play a critical role in strengthening the financial system by recovering stressed assets and improving liquidity. ARCs are regulated by the Reserve Bank of India (RBI) under the SARFAESI Act, 2002.
In this Saving Mantra guide, we explain what an ARC is and provide a step-by-step process for Asset Reconstruction Company Registration in India, including eligibility, capital requirements, documents, and ongoing compliance.
What is an Asset Reconstruction Company (ARC)?
An Asset Reconstruction Company is a specialized financial institution that purchases NPAs from banks and financial institutions and undertakes recovery or restructuring of such assets. ARCs help lenders clean up balance sheets and improve credit flow in the economy.
Regulatory Framework for ARC Registration
- SARFAESI Act, 2002
- RBI Act, 1934
- RBI guidelines and Master Directions applicable to ARCs
Key Functions of an ARC
- Acquisition of NPAs from banks/FIs
- Reconstruction or restructuring of stressed assets
- Enforcement of security interests
- Issuance of Security Receipts (SRs) to Qualified Buyers
- Resolution and recovery of bad loans
Eligibility Criteria for ARC Registration
To register an ARC in India, the applicant must:
- Be incorporated as a Public Limited Company
- Have minimum Net Owned Fund (NOF) of ₹300 crore
- Promoters and directors must be fit and proper
- Have a sound business plan and governance framework
- Comply with RBI’s prudential and operational norms
Benefits of ARC Registration
- Legal authority to acquire and resolve NPAs
- RBI-regulated credibility
- Opportunity to participate in India’s stressed asset market
- Access to institutional investors and Qualified Buyers
- Contribution to financial system stability
Step-by-Step Process for Asset Reconstruction Company Registration in India
Step 1: Company Incorporation
Incorporate a Public Limited Company under the Companies Act, 2013 with ARC as the main object.
Step 2: Arrange Minimum Capital
Infuse the required Net Owned Fund of ₹300 crore and obtain a CA-certified net worth certificate.
Step 3: Prepare RBI Documentation
Prepare a comprehensive application set including:
- Detailed business plan
- Asset acquisition and resolution strategy
- Risk management and governance framework
- KYC, AML, and compliance policies
- Board resolutions
Step 4: File Application with RBI
Submit the ARC registration application to RBI along with all supporting documents.
Step 5: RBI Due Diligence
RBI conducts detailed scrutiny of promoters, capital adequacy, governance standards, and operational readiness. Clarifications may be sought.
Step 6: Grant of Certificate of Registration
Upon satisfaction, RBI issues the Certificate of Registration permitting the company to operate as an ARC.
Step 7: Commencement of Operations
After registration, the ARC can acquire NPAs, issue Security Receipts, and begin asset reconstruction activities.
Documents Required for ARC Registration
- Certificate of Incorporation
- MOA & AOA
- PAN Card of company
- Net Owned Fund certificate
- Audited financial statements
- Director and promoter KYC
- Detailed business plan and policies
- Board resolutions
Timeline for ARC Registration
- ARC registration generally takes 9 to 12 months, depending on RBI scrutiny and document completeness.
Post-Registration Compliance for ARCs
- Maintain minimum capital adequacy
- Periodic RBI returns and reporting
- Compliance with SARFAESI and RBI norms
- Statutory and internal audits
- Disclosure and governance compliance
Penalty for Operating Without ARC Registration
Operating asset reconstruction activities without RBI registration may result in:
- Heavy monetary penalties
- Cancellation of business operations
- Legal action under RBI and SARFAESI laws
Why Choose Saving Mantra for ARC Registration?
- RBI-focused expertise in stressed asset regulations
- End-to-end ARC incorporation and licensing support
- Accurate documentation and regulatory liaison
- Transparent and affordable pricing
- Ongoing compliance and advisory services
Conclusion
Asset Reconstruction Company Registration in India is a highly regulated but strategic opportunity to participate in the growing stressed asset resolution ecosystem. By following the correct step-by-step ARC registration process, promoters can obtain RBI approval and operate a compliant ARC. Saving Mantra ensures a smooth, professional, and regulation-ready Asset Reconstruction Company registration experience.
Disclaimer
The information provided in this blog is for general informational purposes only and does not constitute legal, financial, or professional advice. ARC regulations, capital requirements, and RBI guidelines are subject to change. Readers are advised to consult qualified professionals before applying for Asset Reconstruction Company Registration in India or commencing ARC operations.