Section 3(1)(b) of the SARFAESI Act requires that no asset reconstruction company shall carry on the business of securitisation or asset reconstruction without having a minimum net owned fund. What is the minimum net owned fund prescribed under the Act?

Section 3(1)(b) as substituted by the 2016 Amendment Act provides that no asset reconstruction company shall commence or carry on business of securitisation or asset reconstruction without having a net owned fund of not less than two crore rupees, or such other higher amount as the Reserve Bank may, by notification, specify. A proviso allows the RBI to specify different amounts for different classes of ARCs. This minimum capital requirement ensures financial soundness of ARCs. The RBI has prescribed substantially higher NOF requirements for ARCs in practice through its guidelines, but the statutory floor in the Act remains two crore rupees.