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Question

Refer to the following information to answer the next 4 questions (Q15 to Q17) The asset reconstruction industry is set to clock the best growth this fiscal as their asset under management is expected to increase by almost 10% to Rs 1.1 lakh crore. The 29-player ARC industry began its journey in the second half of 2002 and has since undergone radical regulatory changes and challenges. With the beginning of operation of public sector National Asset Reconstruction Co. and rising popularity of the Insolvency and Bankruptcy Code effective from May 2016 also pose challenge for the ARC industry. Another major challenge is the steep fall in banks' non-performing assets, which is set to fall to under 5% by March, down from over 11% in FY18. Assets under management of ARCs are set togrow 9.8% to a five-year high this fiscal, driven by a few large transactions to Rs 1.19 lakh crore.

Which of the following statements about Net Owned Fund (NOF) requirement for ARCs is true?

A The NOF requirement for ARCs has been increased to Rs.200 crore. Correct Answer Incorrect Answer
B The NOF requirement for ARCs has been increased to Rs.500 crore Correct Answer Incorrect Answer
C The NOF requirement for ARCs has been increased to Rs.300 crore Correct Answer Incorrect Answer
D The NOF requirement for ARCs has been decreased to Rs.250 crore Correct Answer Incorrect Answer
E None of the above. Correct Answer Incorrect Answer

Solution

The minimum Net Owned Fund (NOF) for ARCs shall be Rs.300 crore on an ongoing basis from October 11, 2022. Therefore, option C is the correct answer. Options A, B, and D are incorrect as they provide incorrect information, and option E is incorrect as there is a change in the NOF requirement.

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