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    Question

    Under the SARFAESI Act, what is the maximum period

    within which an Asset Reconstruction Company (ARC) is required to resolve an NPA after acquiring it?
    A 5 years Correct Answer Incorrect Answer
    B 7 years Correct Answer Incorrect Answer
    C 8 years Correct Answer Incorrect Answer
    D 10 years Correct Answer Incorrect Answer
    E 12 years Correct Answer Incorrect Answer

    Solution

    Under the SARFAESI Act, 2002 , Asset Reconstruction Companies (ARCs) are mandated to resolve Non-Performing Assets (NPAs) that they acquire within a maximum period of 8 years . The purpose of this provision is to ensure that ARCs focus on the timely resolution of distressed assets and recover the maximum value for the banks that have sold their NPAs. The 8-year period includes the time for restructuring or recovery of the asset, ensuring that the asset is not left unresolved for an extended period. After acquiring the NPA, the ARC works on the restructuring of the debt , selling the assets , or legal actions to recover the funds. If the resolution is not achieved within 8 years, the ARC is expected to liquidate the asset to recover at least part of the investment made.

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