Retail ARCs (Asset Reconstruction Companies) – Please onboard BBPS

          The typical products offered in the Indian retail banking segment are housing loans, consumption loans for purchase of durables, auto loans, credit cards and educational loans. The loans are marketed under attractive brand names to differentiate the products offered by different banks and NFBCs.

          Retail Loans too can turn bad and the primary lenders may prefer to sell these bad loans to ARCs specialised in the Retail loans recovery.

The primary objective of ARCs is to recover the bad loans outstanding’s from the borrowers. This means each Loan Account will have a unique identifier and the borrower has to be quote this unique identifier while paying the Loan outstanding amount.

Hence, it is apt that the ARCs onboard BBPS under ‘Loan Repayment’ Biller Category.

5 Advantages to ARCs on onboarding BBPs

Advantage 01) Pan-India collection network within no extra hassle

Advantage 02) The borrower is assured that the repayment amount is going to the correct institution / loan account

Advantage 03) Instant receipt to the borrower instead of provisional receipts and associated recon issue.

Advantage 04) The recovery agent need not collect cash/cheques and hand over to the linked office for further processing

Advantage 05) Contactless payment option 24*7, 365 days a year

 ARCs can opt for the Free Format amount Option instead of Fetch n Pay. The borrower only has to input the unique identifier and the borrower name is displayed. The borrower can remit the decided  amount only.  

What are ARCs?

 An Asset Reconstruction Company is a specialized financial institution that buys the NPAs or bad assets from banks and financial institutions so that the latter can clean up their balance sheets. Or in other words, ARCs are in the business of buying bad loans from banks.

 ARCs clean up the balance sheets of banks when the latter sells these to the ARCs. Instead of going after companies, Banks can sell their BAD LOAN to Asset Reconstruction Companies.

These companies buy the bad loan at discount rates. This means an asset reconstruction company will pay the agreed amount to the bank.

Asset Reconstruction Companies (ARCs) have been created to bring about a system for recovering Non-Performing Assets (NPAs) from the books of secured lenders and unlocking the value of Non-Performing Assets (NPA).

Reserve Bank of India (RBI) provides license for ARCs and ARCs are empowered by the SARFAESI Act.

          ARCs handle both corporate loans as well as retail loans.

 

 

List of Asset Reconstruction Companies (ARCs) registered with RBI (As on February 29, 2020)

 

S No Name of the company

1       CFM Asset Reconstruction Private Limited

2       Rare Asset Reconstruction Limited (Erstwhile Rare Asset Reconstruction Private Limited)

3       ANA ARC Private Limited

4       Omkara Assets Reconstruction Private Limited

5       MAXIMUS ARC Limited

6       Pridhvi Asset Reconstruction and Securitisation Company Ltd.

7       Aditya Birla ARC Limited

8       Ambit Flowers Asset Reconstruction Private Limited

9       ARCION Revitalization Private Limited

10     ASREC (India) Limited

11     Asset Reconstruction Company (India) Limited 

12     Edelweiss Asset Reconstruction Company Limited

13     India Resurgence ARC Private Limited

14     India SME Asset Reconstruction Company Limited

15     Indiabulls Asset Reconstruction Private Limited

16     Invent Assets Securitisation & Reconstruction Pvt. Ltd.

17     JM Financial Asset Reconstruction Company Limited (Erstwhile JM Financial Asset Reconstruction Company Private Limited)

18     Lone Star India Asset Reconstruction Private Limited

19     Pegasus Assets Reconstruction Pvt. Ltd.

20     Phoenix ARC Private Limited

21     Reliance Asset Reconstruction Company Limited 

22     Suraksha Asset Reconstruction Private Limited

23     International Asset Reconstruction Company Pvt. Ltd. 

24     Alchemist Asset Reconstruction Company Limited  (Erstwhile Dhir & Dhir Asset Reconstruction & Securitization Company Limited)

25     Assets Care & Reconstruction Enterprise Ltd.  (Erstwhile Assets Care Enterprise Ltd.)    

26     Encore Assets Reconstruction Company Private Limited

27     Prudent ARC Limited

28     UV Asset Reconstruction Company Limited

References:  

RBI Circular - Fair Practices Code for Asset Reconstruction Companies @ https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11937&Mode=0

 

RBI Draft Report - Draft Comprehensive Framework for Sale of loan exposures dt. June8th, 2020