Question

    Under the provisions of the SARFAESI Act, 2002,

    specialized entities called ARCs are regulated by RBI. What does the term ARC stand for?
    A Asset Recovery Companies Correct Answer Incorrect Answer
    B Asset Reconstruction Companies Correct Answer Incorrect Answer
    C Asset Restructuring Companies Correct Answer Incorrect Answer
    D Asset Reallocation Corporations Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    • The SARFAESI Act, 2002 empowers banks and financial institutions to recover their dues without court intervention by taking possession of secured assets of defaulting borrowers. • To aid this process, the Act provides for the creation of Asset Reconstruction Companies (ARCs), which are regulated by the RBI. • ARCs acquire stressed assets or NPAs from banks and financial institutions, then try to restructure, securitize, or liquidate them to recover value. • Popular examples in India include ARCIL (Asset Reconstruction Company India Ltd). Thus, in SARFAESI context, ARC stands for Asset Reconstruction Company.

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