Question
What is the minimum Net Owned Fund (NOF) requirement for
an Asset Reconstruction Company (ARC) to commence the business of securitisation or asset reconstruction?Solution
As per RBI guidelines, with effect from October 11, 2022, an Asset Reconstruction Company (ARC) must maintain a minimum Net Owned Fund (NOF) of ₹300 crore to commence and continue the business of securitisation or asset reconstruction. • This was an upward revision from the earlier requirement of ₹100 crore. • Existing ARCs as on October 11, 2022, were provided a glide path to achieve compliance with the revised NOF threshold. • The higher capital requirement aims to strengthen the financial position of ARCs, ensuring they have sufficient skin in the game and are better placed to handle stressed assets.
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