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भारतीय �रज़व र् बक�
RESERVE BANK OF INDIA
RBI/DOR/2024-25/116
DoR.FIN.REC.16/26.03.001/2024-25 April 24, 2024
(Updated as on April 23, 2025)
(Updated as on January 21, 2025)
All Asset Reconstruction Companies (ARCs)
Dear Sir/ Madam,
Master Direction – Reserve Bank of India (Asset Reconstruction Companies)
Directions, 2024
ARCs play a critical role in the resolution of stressed financial assets of banks and
financial institutions, thereby enhancing the overall health of the financial system. To
ensure prudent and efficient functioning of ARCs and to protect the interest of investors,
Reserve Bank of India hereby issues the Master Direction – Reserve Bank of India (Asset
Reconstruction companies) Directions, 2024 (the Directions), hereinafter specified.
These Directions have been issued in exercise of the powers conferred by Sections 3, 9,
10, 12 and 12A of the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (54 of 2002).
Yours faithfully,
(J. P. Sharma)
Chief General Manager
िविनयमन िवभाग, केंद्रीय कायार्लय ,िद्वतीय तल ,मु� भवन, शहीद भगत िसंह रोड ,फोटर्, मुंबई -400001
Department of Regulation, Central Office, 2nd Floor, Main Building, Shaheed Bhagat Road, Fort, Mumbai-400 001
Email: cgmicdor@rbi.org.in
िह�ी आसान ह,ै इसका प्रयोग बढाइए।Table of Contents
Section I: Introduction ............................................................................................... 4
1. Short title and commencement ............................................................................. 4
2. Applicability of the Directions .............................................................................. 4
3. Definitions .............................................................................................................. 4
4. Interpretations ........................................................................................................ 7
5. Exemptions ............................................................................................................. 7
Section II: Registration and related matters ............................................................ 8
6. Registration ............................................................................................................ 8
7. Net owned fund ...................................................................................................... 8
8. Activities of ARCs .................................................................................................. 9
Section III: Guidelines on Asset Reconstruction and Securitisation .................. 12
9. Acquisition of financial assets ........................................................................... 12
10. Plan for realisation of financial assets ............................................................. 14
11. Change in or takeover of the management of the business of the borrower 15
12. Sale or lease of a part or whole of the business of the borrower .................. 19
13. Rescheduling of debts payable by the borrower ............................................ 20
14. Enforcement of security interest ...................................................................... 20
15. Settlement of dues payable by the borrower ................................................... 20
16. Conversion of any portion of debt into equity of a borrower entity .............. 20
17. Securitisation ..................................................................................................... 24
Section IV: Prudential regulations .......................................................................... 28
18. Capital adequacy ratio ....................................................................................... 28
19. Asset classification............................................................................................ 28
20. Provisioning requirements ................................................................................ 29
Section V: Governance and conduct ..................................................................... 30
21. Board and management .................................................................................... 30
22. Fit and Proper criteria for sponsors/ investors ............................................... 32
23. Fair Practices Code (FPC) ................................................................................. 35
Section VI: Accounting and disclosures ................................................................ 39
24. Guidelines related to accounting ..................................................................... 39
225. Investments ........................................................................................................ 39
26. Income recognition ............................................................................................ 40
27. Disclosures in the balance sheet ..................................................................... 42
28. Submission of returns ....................................................................................... 44
29. Submission of audited balance sheet .............................................................. 44
30. Reporting of cases involving ............................................................................ 44
31. Display of information - secured assets possessed under the SARFAESI
Act, 2002 ................................................................................................................... 44
Section VII: Miscellaneous instructions ................................................................. 45
32. Internal audit ...................................................................................................... 45
33. Guidelines regarding Credit Information Companies ..................................... 45
34. Filing of transactions with the Central Registry set up under the Act .......... 46
35. Submission of financial information to Information Utilities ......................... 46
36. Know Your Customer (KYC) ............................................................................. 46
37. Reporting to Indian Banks’ Association (IBA) ................................................. 47
38. Penal consequences for non-compliance ....................................................... 47
39. Repeal provisions .............................................................................................. 47
Annex I: Disclosures related to SRs ...................................................................... 48
Annex II: Declaration and undertaking by Director/ MD/ CEO as on __ .............. 50
Annex III: Information About the Director/ MD/ CEO............................................. 53
Annex IV: An indicative list of documents/ information to be furnished along
with the application ................................................................................................. 57
Annex V: Form of deed of covenants with a Director ........................................... 58
Annex VI .................................................................................................................... 63
Form I: Declaration to be submitted by the sponsor ............................................ 63
Form II: Information to be furnished to the Reserve Bank by the ARC while
forwarding the application for seeking prior approval of sponsors .................... 68
Form III: Annual declaration (as on March 31 every year) to be furnished to the
ARC by all the existing sponsors of ARCs ............................................................ 69
Annex VII: List of repealed circulars ...................................................................... 70
3Section I: Introduction
1. Short title and commencement
1.1 These Directions shall be called Master Direction – Reserve Bank of India (Asset
Reconstruction Companies) Directions, 2024.
1.2 These Directions shall come into effect on the day they are placed on the website of
the Reserve Bank.
2. Applicability of the Directions: The provisions of these Directions shall apply to every
asset reconstruction company (ARC) registered with the Reserve Bank under Section 3
of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002.
3. Definitions
3.1 In these Directions, unless the context otherwise requires, the terms herein shall bear
the meanings assigned to them as below:
(i) “Act” means the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (54 of 2002).
(ii) “Breakup value” means the equity capital and reserves as reduced by intangible
assets and revaluation reserves, divided by the number of equity shares of the
investee company.
(iii) “Change in management” means effecting change by the borrower at the instance of
ARC in the person who has responsibility for the whole or substantially whole of the
management of the business of the borrower and/ or other relevant personnel.
(iv) “Date of acquisition” means the date on which the ownership of financial assets is
acquired by ARC either on its own books or directly in the books of the trust.
(v) “Deposit” means deposit as defined in the Companies (Acceptance of Deposits)
Rules 2014 framed under Section 73 of the Companies Act, 2013.
4(vi) “Earning value” means the value of an equity share computed by taking the average
of profits after tax as reduced by the preference dividend and adjusted for extra-
ordinary and non-recurring items, for the immediately preceding 3 years and further
divided by the number of equity shares of the investee company and capitalised at
the following rate:
a) in case of predominantly manufacturing company, 8%;
b) in case of predominantly trading company, 10%; and
c) in case of any other company, including non-banking financial company, 12%.
Note: If an investee company is a loss-making company, the earning value shall be
taken as zero.
(vii) “Fair value” means the mean of the earning value and the breakup value.
(viii) “Net owned fund” means the amount arrived at by reducing from owned fund, the
amounts representing
a) investments of the ARC in shares of –
i. its subsidiaries;
ii. companies in the same group;
iii. all other ARCs; and
b) the book value of debentures, bonds, outstanding loans and advances made to,
and deposits with -
i. subsidiaries of the ARC; and
ii. companies in the same group,
to the extent such amount exceeds 10% of the owned fund.
(ix) “Non-performing asset (NPA)” in the books of ARCs means an asset in respect of
which:
a) Interest or principal (or instalment thereof) is overdue for a period of 180 days or
more from the date of acquisition or the due date as per contract between the
borrower and the originator, whichever is later;
5b) interest or principal (or instalment thereof) is overdue for a period of 180 days or
more from the date fixed for receipt thereof in the plan formulated for realisation of
the assets referred to in paragraph 10 herein;
c) interest or principal (or instalment thereof) is overdue on expiry of the planning
period, where no plan is formulated for realisation of the assets referred to in
paragraph 10 herein; or
d) any other receivable, if it is overdue for a period of 180 days or more in the books
of the ARC.
Provided that the Board of Directors of an ARC may, on default by the borrower,
classify an asset as an NPA even earlier than the period mentioned above (for
facilitating enforcement as provided for in Section 13 of the Act).
(x) “Overdue” means an amount which remains unpaid beyond the due date.
(xi) “Owned fund” means the aggregate of
a) paid up equity capital;
b) paid up preference capital, to the extent it is compulsorily convertible into equity
capital;
c) free reserves (excluding revaluation reserve);
d) credit balance in profit and loss account;
as reduced by-
e) the debit balance on the profit and loss account;
f) miscellaneous expenditure (to the extent not written off or adjusted);
g) book value of intangible assets;
h) under/ short provision against NPA/ diminution in value of investments;
i) over recognition of income, if any; and
j) other deductions required on account of the items qualified by the auditors in
their report on the financial statements.
6ARCs shall not be required to deduct a Right-of-Use (ROU) asset (created in
terms of Ind AS 116-Leases) from Owned Fund, provided the underlying asset
being taken on lease is a tangible asset.
(xii) “Planning period” means a period not exceeding six months allowed for formulating
a plan for realisation of financial assets acquired for the purpose of reconstruction.
(xiii) “Standard asset” means an asset, which is not an NPA.
(xiv) “Takeover of management” means taking over of the responsibility for the
management of the business of the borrower with or without effecting change in
management personnel of the borrower by the ARC.
(xv) “Trust” means trust as defined in Section 3 of the Indian Trusts Act, 1882.
3.2 Words or expressions used but not defined herein and defined in the Act, shall have
the same meaning as assigned to them in the Act. Any other words or expressions not
defined in that Act shall have the same meaning as assigned to them in the Companies
Act, 2013.
4. Interpretations: For the purpose of giving effect to the provisions of these Directions,
the Reserve Bank may, if it considers necessary, issue necessary clarifications in respect
of any matter covered herein and the interpretation of any provision of these Directions
given by the Reserve Bank shall be final and binding on all the parties concerned. Further,
these provisions shall be in addition to and not in derogation of the provisions of any other
laws, rules, regulations or directions, for the time being in force.
5. Exemptions: Reserve Bank may, if it considers necessary for avoiding any hardship
to the ARCs or for any other just and sufficient reason exempt all ARCs or a particular
ARC, from all or any of the provisions of these Directions either generally or for any
specified period, subject to such conditions as the Reserve Bank may impose.
7Section II: Registration and related matters
6. Registration
6.1 Before commencement of the business of securitisation or asset reconstruction, an
ARC shall apply for registration and obtain a certificate of registration (CoR) from the
Reserve Bank as provided under Section 3 of the Act.
6.2 The ARC seeking registration shall submit its application in the application form
hosted on the Reserve Bank’s website, duly filled in with all the relevant annexures/
supporting documents, to the Chief General Manager-in-Charge, Department of
Regulation, Central Office, Reserve Bank of India, Shahid Bhagat Singh Marg, Fort,
Mumbai - 400001.
6.3 An ARC, which has obtained a CoR from the Reserve Bank, can undertake both
securitisation and asset reconstruction activities.
6.4 An ARC shall commence business within six months from the date of grant of CoR by
the Reserve Bank. Reserve Bank may grant extension up to twelve months from the date
of grant of CoR on receipt of the application from the ARC.
6.5 Provisions of Section 45-IA, 45-IB and 45-IC of RBI Act, 1934 shall not apply to an
ARC registered with the Reserve Bank under Section 3 of the Act.
6.6 Any entity not registered with the Reserve Bank under Section 3 of the Act may
conduct the business of securitisation or asset reconstruction outside the purview of the
Act subject to requisite authorisation/ approval1.
7. Net owned fund
7.1 To commence the business of securitisation or asset reconstruction, an ARC is
required to have a minimum net owned fund (NOF) of ₹300 crore and thereafter, on an
ongoing basis.
1 There may be instances wherein banks and other financial institutions undertake certain transactions, which are
in the nature of securitisation or asset reconstruction, wherever these are permitted by their respective laws and
regulations.
87.2 ARCs existing as on October 11, 2022 have been provided the following glide path to
achieve the minimum required NOF of ₹300 crore:
Minimum required NOF by March 31, 2024 by March 31, 2026
on October 11, 2022
₹100 crore ₹200 crore ₹300 crore
In case of non-compliance at any of the above stages, the non-complying ARC shall be
subject to supervisory action, including prohibition on undertaking incremental business
till it reaches the required minimum NOF applicable at that time.
8. Activities of ARCs
8.1 An ARC shall commence/ undertake only securitisation and asset reconstruction
activities and functions provided under Section 10 of the Act.
8.2 In terms of the provision of Section 10(2) of the Act, ARCs have been permitted to
undertake those activities as Resolution Applicants under Insolvency and Bankruptcy
Code, 2016 (IBC) which are not specifically allowed under the Act. This permission shall
be subject to the following conditions:
(i) The ARC has a minimum NOF of ₹1,000 crore.
(ii) The ARC shall have a Board-approved policy regarding taking up the role of
Resolution Applicant which may, inter alia, include the scope of activities, internal limit
for sectoral exposures, etc.
(iii) A committee comprising of a majority of independent directors shall be constituted to
take decisions on the proposals of submission of resolution plan under IBC.
(iv) The ARC shall explore the possibility of preparing a panel of sector-specific
management firms/ individuals having expertise in running firms/ companies which
may be considered for managing the firms/ companies, if needed.
(v) In respect of a specific corporate insolvency resolution process (CIRP), the ARCs shall
not retain any significant influence or control over the corporate debtor after five years
from the date of approval of the resolution plan by the Adjudicating Authority under
9IBC. In case of non-compliance with this condition, the ARCs shall not be allowed to
submit any fresh resolution plans under IBC either as a Resolution Applicant or a
Resolution Co-Applicant.
8.3 An ARC may, as a sponsor and for the purpose of establishing a joint venture, invest
in the equity share capital of another ARC.
8.4 An ARC may deploy its funds for undertaking restructuring of acquired loan account
with the sole purpose of realizing its dues.
8.5 An ARC may deploy any surplus funds available with it, in terms of a Board-approved
policy, in -
(i) Government securities and deposits with scheduled commercial banks, Small
Industries Development Bank of India (SIDBI), National Bank for Agriculture and Rural
Development (NABARD) or such other entity as may be specified by the Reserve
Bank from time to time.
(ii) Short-term instruments viz., money market mutual funds, certificates of deposit and
corporate bonds/ commercial papers which have a short-term rating equivalent to the
long-term rating of AA- or above by an eligible credit rating agency (CRA), subject to
a cap of 10% of the NOF of the ARC on maximum investment in such short-term
instruments.
8.6 No ARC shall invest in land or building. However, this restriction shall not apply to -
(i) investment by the ARC in land and building for its own use up to 10% of its owned
funds; and
(ii) land and building acquired by the ARC in satisfaction of claims in ordinary course of
its business of reconstruction of assets in accordance with the provisions of the Act.
Any land and/ or building acquired by the ARC, in the ordinary course of its business
of reconstruction of assets while enforcing its security interest, shall be disposed of
within a period of five years from the date of such acquisition or such extended period
10as may be permitted by the Reserve Bank in the interest of realisation of the dues of
the ARC.
8.7 An ARC shall not raise monies by way of deposit.
11Section III: Guidelines on Asset Reconstruction and Securitisation
Asset Reconstruction
9. Acquisition of financial assets
9.1 Every ARC shall frame a Board-approved 'financial asset acquisition policy' within
ninety days of grant of the CoR which shall provide that transactions take place in a
transparent manner and at a fair price in a well-informed market and the transactions are
executed on arm’s length basis by exercise of due diligence. It shall clearly lay down the
policies and guidelines covering, inter alia, the following:
(i) norms and procedure for acquisition either on its own books or directly in the books of
the trust;
(ii) types and the desirable profile of the assets;
(iii) valuation procedure ensuring that the assets acquired have realisable value which is
capable of being reasonably estimated and independently valued; and
(iv) in the case of financial assets acquired for asset reconstruction, the broad parameters
for formulation of plans for their realisation.
9.2 The Board may delegate powers to a committee comprising any director and/ or any
functionaries of the ARC for taking decisions on proposals for acquisition of financial
assets.
9.3 Deviation from the policy should be made only with the approval of the Board.
9.4 Before bidding for the stressed assets, ARCs may seek adequate time, of not less
than two weeks, from the auctioning banks to conduct a meaningful due diligence of the
account by verifying the underlying assets.
9.5 The share of financial assets to be acquired from the bank/ financial institution should
be appropriately and objectively worked out keeping in view the provision in the Act
requiring consent of secured creditors holding not less than 60% of the amount
outstanding to a borrower for the purpose of enforcement of security interest.
129.6 For easy and faster realisability, all the financial assets due from a single debtor to
various banks/ financial institutions may be considered for acquisition. Similarly, financial
assets having linkages to the same collateral may be considered for acquisition to ensure
relatively faster and easy realisation.
9.7 Both fund and non-fund based financial assets may be included in the list of assets
for acquisition. Assets classified as special mentioned accounts (SMAs) in the books of
the originator may also be acquired.
9.8 Acquisition of funded assets should not include takeover of outstanding commitments,
if any, of any bank/ financial institution to lend further. Terms of acquisition of security
interest in non-fund transactions, should provide for the relative commitments to continue
with bank/ financial institution, till demand for funding arises.
9.9 As far as possible, the valuation process should be uniform for assets of same profile.
It should be ensured that the valuation of the financial assets is done in a scientific and
objective manner. Valuation may be done either internally or by engaging an independent
agency, depending upon the value of the assets. Ideally, valuation may be entrusted to
the committee authorised to approve acquisition of assets, which may carry out the task
in line with financial asset acquisition policy mentioned at paragraph 9.1.
9.10 An ARC can sell financial asset to another ARC subject to the following conditions:
(i) The transaction is settled on cash basis;
(ii) Price discovery for such transaction shall not be prejudicial to the interest of SR
holders;
(iii) The selling ARC shall utilize the proceeds so received for the redemption of
underlying security receipts (SRs); and
(iv) The date of redemption of underlying SRs and total period of realisation shall not
extend beyond eight years from the date of acquisition of the financial asset by the
first ARC.
9.11 ARCs shall not acquire financial assets from the following on a bilateral basis,
whatever may be the consideration:
13(i) a bank/ financial institution which is the sponsor of the ARC;
(ii) a bank/ financial institution which is either a lender to the ARC or a subscriber to the
fund, if any, raised by the ARC for its operations;
(iii) an entity in the group to which the ARC belongs.
However, they may participate in the auctions of the financial assets provided such
auctions are conducted in a transparent manner, on arm’s length basis and the prices are
determined by the market forces.
10. Plan for realisation of financial assets
10.1 Every ARC may, within the planning period, formulate a plan for realisation of assets
which may provide for one or more of the following measures:
(i) Change in or takeover of the management of the business of the borrower
(ii) Sale or lease of the whole or part of business of borrower
(iii) Rescheduling of debts payable by the borrower
(iv) Enforcement of security interest in accordance with the provisions of the Act
(v) Settlement of dues payable by the borrower
(vi) Conversion of any portion of debt into equity of a borrower company
10.2 The ARC shall formulate the policy for realisation of financial assets under which the
period for realisation shall not exceed five years from the date of acquisition of the
financial asset concerned.
10.3 The Board of the ARC may increase the period for realisation of financial assets so
that the total period for realisation shall not exceed eight years from the date of acquisition
of the financial asset concerned.
10.4 In case, the ARC is one of the lenders in an account, where a resolution plan has
been finalised and the same extends beyond the maximum resolution period allowed for
ARCs as per paragraph 10.3 above, the ARC may accept a resolution period co-terminus
with other secured lenders.
1410.5 The Board of the ARC shall specify the steps that shall be taken by the ARC to
realise the financial assets within the time frame referred to in the paragraphs 10.2 and
10.3 above as the case may be.
10.6 The qualified buyers (QBs) shall be entitled to invoke the provisions of Section 7(3)
of the Act only at the end of such extended period if the period for realisation is extended
under paragraph 10.3 above.
Measures of Asset Reconstruction
11. Change in or takeover of the management of the business of the borrower
11.1 An ARC may resort to change in or takeover of the management of the business of
the borrower for the purpose of realisation of its dues from the borrower subject to the
provisions of these guidelines. The objective of these guidelines is to ensure fairness,
transparency, non-discrimination and non-arbitrariness in the action of ARCs and to build
in a system of checks and balances while effecting change in or takeover of the
management of the business of the borrower by the ARCs under Section 9(1)(a) of the
Act. The ARCs shall follow these instructions while exercising the powers conferred on
them under Section 9(1)(a) of the Act. The ARCs resorting to takeover of management of
the business of the borrower shall do so after complying with the manner of takeover of
the management in accordance with the provisions of Section 15 of the Act. On realisation
of its dues in full, the ARC shall restore the management of the business to the borrower
as provided in Section 15(4) of the Act. However, if any ARC has converted part of its
debt into shares of a borrower company and thereby acquired controlling interest in the
borrower company, such ARC shall not be liable to restore the management of the
business to such borrower.
11.2 Grounds for effecting change in or takeover of management: An ARC shall be
entitled to effect change in management or takeover of the management of business of
the borrower on any of the following grounds:
(i) the borrower defaults in repayment of the amount due under the relevant loan
agreement/s in following circumstances:
15(a) non-payment of dues despite adequate cash flow and availability of other
resources, or
(b) routing of transactions through banks which are not lenders/ consortium members
so as to avoid payment of dues, or
(c) siphoning off funds to the detriment of the defaulting unit, or misrepresentation/
falsification of records pertaining to the transactions with the ARC.
For the purpose of this paragraph, the default by the borrower must be deliberate and
calculated as detailed above. ARC shall keep in view the track record of the borrower
and the decision regarding such defaults by the borrower should not be based on
isolated transactions/ incidents which are not material.
(ii) the ARC is satisfied that the management of the business of the borrower is acting in
a manner adversely affecting the interest of the creditors (including ARC) or is failing
to take necessary action to avoid any event which would adversely affect the interest
of the creditors;
(iii) the ARC is satisfied that the management of the business of the borrower is not
competent to run the business resulting in losses/ non-repayment of dues to the ARC
or the key managerial personnel of the business of the borrower have not been
appointed for more than one year from the date of such vacancy which would
adversely affect the financial health of the business of the borrower or the interests of
the ARC as a secured creditor;
(iv) the borrower has without the prior approval of the secured creditors (including ARCs),
sold, disposed of, charged, encumbered or alienated 10% or more (in aggregate) of
its assets secured to the ARC;
(v) there are reasonable grounds to believe that the borrower would be unable to pay its
debts as per terms of repayment accepted by the borrower;
16(vi) the borrower has entered into any arrangement or compromise with creditors without
the consent of the ARC which adversely affects the interest of the ARC or the borrower
has committed any act of insolvency;
(vii) the borrower discontinues or threatens to discontinue any of its businesses
constituting 10% or more of its turnover;
(viii) all or a significant part of the assets of the borrower required for or essential for its
business or operations are damaged due to the actions of the borrower;
(ix) the general nature or scope of the business, operations, management, control or
ownership of the business of the borrower are altered to an extent, which in the opinion
of the ARC, materially affects the ability of the borrower to repay the loan;
(x) the ARC is satisfied that serious dispute/s have arisen among the promoters or
directors or partners of the business of the borrower, which could materially affect the
ability of the borrower to repay the loan;
(xi) failure of the borrower to acquire the assets for which the loan has been availed and
utilization of the funds borrowed for other than stated purposes or disposal of the
financed assets and misuse or misappropriation of the proceeds;
(xii) fraudulent transactions by the borrower in respect of the assets secured to the
creditor/s.
11.3 Eligibility conditions to exercise power for change in or takeover of
management: In the circumstances set forth in paragraph 11.2 above,
(i) an ARC may effect change in or takeover of the management of the business of the
borrower, where the amount due to it from the borrower is not less than 25% of the total
assets owned by the borrower; and
(ii) where the borrower is financed by more than one secured creditor (including ARC),
secured creditors (including ARCs) holding not less than 60% of the outstanding SRs
agree to such action.
17Explanation I: 'Total assets' means total assets as disclosed in its latest audited balance
sheet immediately preceding the date of taking action.
11.4 Policy regarding change in or takeover of management
(i) The ARC shall have a Board-approved policy regarding change in or takeover of the
management of the business of the borrower and the borrowers shall be made aware
of such policy of the ARC.
(ii) This policy shall, inter alia, include the following aspects:
(a) The ARC shall carry out due diligence exercise and record the details of the exercise,
including the findings on the circumstances which had led to default in repayment of
the dues by the borrower and why the decision to change in or takeover of the
management of the business of the borrower has become necessary.
(b) The change in or takeover of the management of the business of the borrower should
be done only after the proposal is examined by an Independent Advisory Committee
(IAC) to be appointed by the ARC consisting of professionals having technical/
finance/ legal background who, after assessment of the financial position of the
borrower, time frame available for recovery of the debt from the borrower, future
prospects of the business of the borrower and other relevant aspects, shall
recommend to the ARC that it may resort to change in or takeover of the management
of the business of the borrower and that such action would be necessary for effective
running of the business leading to recovery of its dues.
(c) The Board of Directors including at least two independent directors of the ARC should
deliberate on the recommendations of the IAC and consider the various options
available for the recovery of dues before deciding whether under the existing
circumstances, the change in or takeover of the management of the business of the
borrower is necessary and the decision shall be specifically included in the minutes.
(d) The ARC shall identify suitable personnel/ agencies, who can take over the
management of the business of the borrower by formulating a plan for operating and
18managing the business of the borrower effectively so that the dues of the ARC may
be realized from the borrower within the time frame.
(e) This plan shall also include the process for restoration of the management of the
business to the borrower in accordance with paragraph 11.1 above, borrower's rights
and liabilities at the time of change in or takeover of management by the ARC and at
the time of restoration of management back to the borrower, rights and liabilities of the
new management taking over management of the business of the borrower at the
behest of ARC. It should be clarified to the new management by the ARC that the
scope of their role is limited to recovery of dues of the ARC by managing the affairs of
the business of the borrower in a prudent manner.
Explanation II: To ensure independence of members of IAC, such members should not
be connected with the affairs of the ARC in any manner and should not receive any
pecuniary benefit from the ARC except for the services rendered for acting as members
of the IAC.
11.5 Procedure for change in or takeover of management
(i) The ARC shall give a notice of sixty days to the borrower indicating its intention to
effect change in or takeover of the management of the business of the borrower and
calling for objections, if any.
(ii) The objections, if any, submitted by the borrower shall be initially considered by the
IAC and thereafter the objections along with the recommendations of the IAC shall be
submitted to the Board of the ARC. The Board shall pass a reasoned order within a
period of thirty days from the date of expiry of the notice period, indicating the decision
of the ARC regarding the change in or takeover of the management of the business
of the borrower which shall be communicated to the borrower.
12. Sale or lease of a part or whole of the business of the borrower: No ARC shall
take the measures specified in Section 9(1)(b) of the Act, until the Reserve Bank issues
necessary guidelines in this behalf.
1913. Rescheduling of debts payable by the borrower
13.1 The ARC shall frame a Board-approved policy, laying down the broad parameters
for rescheduling of debts due from borrowers.
13.2 All proposals should be supported by an acceptable business plan, projected
earnings and cash flows of the borrower.
13.3 The proposals should not materially affect the asset liability management of the ARC
or the commitments given to investors.
13.4 The Board may delegate powers to a committee comprising any director and/ or any
functionaries of the ARC for taking decisions on proposals for rescheduling of debts.
13.5 Deviation from the policy should be made only with the approval of the Board.
13.6 In cases, where ARCs have exposure to a borrower in respect of which a resolution
plan is under implementation in terms of the Prudential Framework for Resolution of
Stressed Assets dated June 7, 2019, as amended from time to time, ARCs shall also sign
the inter-creditor agreement (ICA) and adhere to all its provisions.
14. Enforcement of security interest
14.1 The ARCs are required to obtain, for the purpose of enforcement of security interest,
the consent of secured creditors (including ARCs) holding not less than 60% of the
amount outstanding to a borrower.
14.2 While taking recourse to the sale of secured assets in terms of Section 13(4) of the
Act, the ARC may itself acquire the secured assets, either for its own use or for resale,
only if the sale is conducted through a public auction.
152. Settlement of dues payable by the borrower
15.1 Every ARC shall frame a Board-approved policy for settlement of dues payable by
the borrowers. This policy shall, inter alia, cover aspects such as cut-off date for one-time
2 Circular no. DoR.SIG.FIN.REC.56/26.03.001/2024-25 dated January 20, 2025
20settlement eligibility, permissible sacrifice for various categories of exposures while
arriving at the settlement amount, methodology for arriving at the realisable value of the
security.
15.2 Settlement with the borrower shall be done only after all possible ways to recover
the dues have been examined and settlement is considered as the best option available.
15.3 The Net Present Value (NPV) of the settlement amount should generally be not less
than the realizable value of securities. If there is a significant variation between valuation
of the securities recorded at the time of acquisition of financial assets and realisable value
of the securities assessed at the time of entering into a settlement, reasons thereof shall
be duly recorded.
15.4 The settlement amount should preferably be paid in lump sum. Where the settlement
does not envisage payment of the entire amount agreed upon in one instalment, the
proposals should be in line with and supported by an acceptable business plan (where
applicable), projected earnings and cash flows of the borrower.
15.5 Settlement of accounts pertaining to a borrower having aggregate value of more
than ₹1 crore in terms of outstanding principal in the books of transferor/s at the time of
acquisition by the ARC3 shall be done as per Board approved policy, subject to the
following:
a) Settlement of dues with the borrower shall be done only after the proposal is
examined by an Independent Advisory Committee (IAC)4 which shall consist of
professionals having technical/ finance/ legal background. IAC, after assessing the
financial position of the borrower, time frame available for recovery of the dues
from the borrower, projected earnings & cash flows of the borrower and other
3 The limit of ₹1 crore shall be the aggregate outstanding principal of all the accounts of the borrower acquired by
the ARC from the transferor/s.
4 Under extant guidelines, an ARC is required to constitute an IAC for examining the proposals related to change in
or takeover of management of business of the borrower. This IAC shall examine the proposals of settlement of dues
with the borrower, as required under this circular.
21relevant aspects, shall give its recommendations to the ARC regarding settlement
of dues with the borrower.
b) The Board of Directors including at least two independent directors or a Committee
of the Board meeting the prescribed criteria5, shall deliberate on the
recommendations of IAC and consider various options available for recovery of
dues before deciding whether the option of settlement of dues with the borrower is
the best option available under the existing circumstances and the decision, along
with detailed rationale, shall be specifically recorded in the minutes of the meeting.
15.6 Settlement of accounts pertaining to a borrower having aggregate value of ₹1 crore
or below in terms of principal outstanding in the books of transferor/s at the time of
acquisition by the ARC shall be done as per the criteria prescribed by the authority in the
Board-approved policy, subject to the following:
a) Any official who was part of the acquisition (as an individual or part of a committee)
of the concerned financial asset shall not be part of processing/ approving the
proposal for settlement of the same financial asset, in any capacity.
b) A quarterly report on the resolution of these accounts shall be placed before the
Board/ Committee of the Board which meets the criteria prescribed in paragraph
15.5.
c) The Board shall mandate a suitable reporting format so as to ensure adequate
coverage of the following aspects at the minimum: (i) trend in number of accounts
and amounts subjected to compromise settlement (q-o-q and y-o-y); (ii) out of (i)
above, separate breakup of accounts classified as fraud, wilful default declared by
the banks and NBFCs; (iii) amount-wise, acquisition authority wise, and business
5 The Committee is chaired by an independent director and has minimum two independent directors, including the
Chair; the Committee consists of at least one-third of the total strength of the Board or three directors, whichever
is higher, and at least half of the directors attending the meetings of the Committee are independent directors; the
Committee is created and mandated by the full Board; and the decisions of the Committee, along with rationale, are
recorded in the minutes and placed before the Board at quarterly intervals.
22segment / asset-class wise grouping of such accounts; (iv) extent and timelines of
recovery in such accounts.
15.7 For settlement of dues payable by the borrowers classified as frauds or wilful
defaulters, guidelines prescribed under paragraph 15.5 above shall be applicable,
irrespective of the amount involved. ARCs may undertake settlement of dues in respect
of accounts categorised as wilful defaulters or fraud without prejudice to the criminal
proceeding underway against such borrowers.
15.8 Other legal provisions
(i) The compromise settlements with the borrowers under the above framework shall be
without prejudice to the provisions of any other statute in force.
(ii) Further, wherever ARCs had commenced recovery proceedings under a judicial forum
and the same is pending before such judicial forum, any settlement arrived at with the
borrower shall be subject to obtaining a consent decree from the concerned judicial
authorities.
16. Conversion of any portion of debt into equity of a borrower entity
16.1 The ARC shall frame a Board-approved policy, laying down the broad parameters
for conversion of debt into equity of the borrower entity.
16.2 In cases of financial assets, which have turnaround potential after restructuring but
normally with huge default and unsustainable level of debt, it shall be necessary to arrive
at sustainable level of debt, on the basis of evaluation of detailed business plan with
projected level of operations, which can be serviced by the entity. A part of residual
unsustainable debt may have to be converted into equity for an optimal debt equity
structure. While ARCs are permitted to have significant influence or have a say in the
decisions surrounding the borrower entity’s turnaround through conversion of debt into
equity, they should not be seen to be running the entities. The shareholding of the ARC
shall not exceed 26% of the post converted equity of the entity under reconstruction.
2316.3 However, ARCs satisfying the conditions mentioned below are exempted from the
limit of shareholding at 26% of post converted equity of the borrower entity subject to
compliance with the provisions of the Act, guidelines/ instructions issued by the Reserve
Bank from time to time as applicable to ARCs as well as Foreign Exchange Management
Act,1999, Reserve Bank of India Act,1934, Companies Act, 2013, Securities and
Exchange Board of India (SEBI) Regulations and other relevant statutes. The extent of
shareholding post conversion of debt into equity shall be in accordance with permissible
foreign direct investment limit for that specific sector:
(i) The ARC shall be in compliance with the prescribed NOF requirement on an ongoing
basis;
(ii) At least half of the Board of Directors of the ARC comprises of independent directors;
(iii) The ARC shall delegate powers to a committee comprising majority of independent
directors for taking decisions on proposals of debt-to-equity conversion; and
(iv) The equity shares acquired under the scheme shall be periodically valued and marked
to market. The frequency of valuation shall be at least once in a month.
16.4 The ARC shall explore the possibility of preparing a panel of sector-specific
management entities/ individuals having expertise in running entities which could be
considered for managing the entities.
17. Securitisation
17.1 Special features of Security Receipts (SRs)
(i) SRs cannot be strictly characterized as debt instruments since they combine the
features of both equity and debt. However, these are recognized as securities under
Securities Contracts (Regulation) Act, 1956.
(ii) The cash flows from the underlying assets cannot be predicted in terms of value and
intervals.
(iii) These instruments, when rated, would generally be below investment grade. These
instruments are privately placed.
2417.2 Issuance of SRs
(i) An ARC shall give effect to the provisions of Sections 7(1) and 7(2) of the Act through
one or more trusts set up exclusively for the purpose. The trusteeship of such trusts
shall vest with the ARC.
(ii) The ARC proposing to issue SRs shall, prior to such an issue, formulate a Board-
approved policy providing for issue of SRs under each scheme formulated by the trust.
(iii) The ARC shall transfer the assets to the said trusts at the price at which those assets
were acquired from the originator if the assets are not acquired directly on the books
of the trust.
(iv) The trusts shall issue SRs only to QBs and such SRs shall be transferable/ assignable
only in favour of other QBs.
(v) The trusts shall hold and administer the financial assets for the benefit of the QBs.
17.3 Investment in SRs issued by the trusts floated by the ARC: ARCs shall, by
transferring funds, invest in the SRs at a minimum of either 15% of the transferors’
investment in the SRs or 2.5% of the total SRs issued, whichever is higher, of each class
of SRs issued by them under each scheme on an ongoing basis till the redemption of all
the SRs issued under such scheme.
17.4 Rating/ Grading of SRs
(i) Every ARC shall mandatorily obtain initial rating/ grading of SRs from a SEBI registered
CRA within a period of six months from the date of acquisition of assets and declare
the Net Asset Value (NAV) of the SRs issued by it. Thereafter, ARCs shall get the
rating/ grading of SRs reviewed from the CRA as on June 30, and December 31 every
year and declare the NAV of SRs forthwith, to enable the QBs to value their
investments in SRs.
(ii) The rating shall be assigned on a specifically developed rating scale called ‘recovery
rating (RR) scale’. Each rating category in the recovery scale shall have an associate
range of recovery, expressed in percentage terms, which can be used for arriving at
25the NAV of SRs. Symbols should be assigned by the CRAs to the associated range of
recovery, which would inter se not deviate by a specified percentage points, say (+/ -)
10%. The rating would be indicative. The rating/ grading should be based on ‘recovery
risk’ as against ‘default’ which is the basis for rating assignments in normal assets, i.e.,
how much more can be recovered instead of timely payment. Rating should reflect
present value of the anticipated recoverability of the future cash flows.
(iii) The recovery rating shall be assessed after factoring in any other relevant obligation
and not on the original debt obligation. The other key factors that should be factored in
while assigning recovery rating are extent of debt acquired, composition of lenders,
collaterals available, security and seniority of debt, individual lender vis-à-vis
institutional lender, estimated cash flows, uncertainty in realising expected cash flows
in initial period, management, business risk, financial risk, etc. The recovery rating shall
also reflect changes like change in resolution strategy of the ARC from time to time.
(iv) The recovery rating should comprise of rating of not only the SRs of the scheme as a
whole but wherever feasible a desegregation of each component in the scheme, which
means that the underlying assets of each entity in the scheme forming the basket
should also be rated.
(v) ARCs shall require the CRAs to disclose the assumptions and rationale behind the
rating and shall disclose these to SR holders.
(vi) ARCs shall retain a CRA for at least six rating cycles (of half year each). If a CRA is
changed mid-way through these six rating cycles, the ARC shall disclose the reason
for such change.
17.5 Methodology for valuation of SRs for declaration of NAV: Each rating category
in the recovery scale shall have an associate range of recovery, expressed in percentage
terms, which can be used for computing the NAV of SRs. The NAV should be restricted
within the recovery range associated with the rating assigned to the SRs. The ARC based
on its recovery experience should choose a particular percentage within the recovery
range indicated by the CRA. The recovery rating percentage so picked by the ARC
26multiplied by the face value of the SR shall give the NAV. The ARC should provide the
rationale for selection of the particular percentage of recovery rating.
Illustration: If the range of recovery is between 81% - 90%, ARC may pick up 87% based
on its judgement. If the face value of SR is ₹10, the face value will be multiplied by the
recovery percentage, i.e., 87%, to arrive at the NAV as ₹8.70.
17.6 Restructuring support finance: An ARC can utilize a part of funds raised under a
scheme from the QBs for restructuring of financial assets acquired under the relative
scheme subject to the following conditions:
(i) ARCs with acquired assets in excess of ₹500 crore can float the fund under a scheme
which envisages the utilization of part of funds raised from QBs in terms of Section
7(2) of the Act, for restructuring of financial assets acquired out of such funds.
(ii) The extent of funds that shall be utilized for reconstruction purpose should not be more
than 25% of the funds raised under the scheme in terms of Section 7(2) of the Act.
The funds raised to be utilized for reconstruction (within the ceiling of 25%) should be
disclosed upfront in the scheme. Further, the funds utilized for reconstruction
purposes should be separately accounted for.
(iii) Every ARC shall frame a Board-approved policy laying down the broad parameters
for utilization of funds raised from QBs under such a scheme.
17.7 Disclosures: Every ARC intending to issue SRs shall make disclosures mentioned
in Annex I.
27Section IV: Prudential regulations
18. Capital adequacy ratio: Every ARC shall maintain, on an ongoing basis, a capital
adequacy ratio of minimum 15% of its total risk weighted assets. Capital for the purpose
of calculation of capital adequacy ratio will have the same meaning as NOF. The risk-
weighted assets shall be calculated as the weighted aggregate of on-balance sheet and
off-balance sheet items as detailed hereunder:
On-balance sheet items Risk weight (%)
(i) Cash and deposits with scheduled commercial 0
banks/ SIDBI/ NABARD
(ii) Investments in Government securities 0
(iii) Shares in other ARCs 0
(iv) All other assets (including ROU asset) 100
Off-balance sheet items
(v) All contingent liabilities 50
Note: Assets which have been deducted from owned fund to arrive at NOF shall have
risk weight of 0%.
19. Asset classification
19.1 Every ARC shall, after taking into account the degree of well-defined credit
weaknesses and extent of dependence on collateral security for realisation, classify the
assets held in its own books into following categories, namely:
(i) Standard assets; and
(ii) NPAs
19.2 The NPAs shall be classified further as-
(i) 'Sub-standard asset' for a period not exceeding 12 months from the date it was
classified as NPA;
(ii) 'Doubtful asset' if the asset remains a sub-standard asset for a period exceeding 12
months;
(iii) 'Loss asset' if-
a) the asset is non-performing for a period exceeding 36 months;
28b) the asset is adversely affected by a potential threat of non-recoverability due to
either erosion in the value of security or non-availability of security;
c) the asset has been identified as a loss asset by the ARC or its internal or external
auditor; or
d) the financial asset including SRs is not realized within the total time frame specified
in the plan for realisation formulated by the ARC under paragraph 10.2 or 10.3 and
the ARC or the trust concerned continues to hold those assets.
19.3 Assets acquired by the ARC for the purpose of asset reconstruction may be treated
as standard assets during the planning period, if any.
19.4 Where the terms of agreement regarding interest and/ or principal relating to a
standard asset have been renegotiated or rescheduled by an ARC (otherwise than during
planning period), the asset concerned shall be classified as sub-standard asset with effect
from the date of renegotiation/ rescheduling or continue to remain as a sub-standard or
doubtful asset as the case be. The asset may be upgraded as a standard asset only after
satisfactory performance for a period of 12 months as per the renegotiated/ rescheduled
terms.
20. Provisioning requirements: Every ARC shall make provisions against NPAs, as
under:
Asset category Provisioning required
Sub-standard assets A general provision of 10% of the outstanding amount
Doubtful assets (i) 100% provision to the extent the asset is not covered by
the estimated realisable value of security
(ii) In addition to item (i) above, 50% of the remaining
outstanding amount
Loss assets The entire asset shall be written off
(If, for any reason, the asset is retained in the books, 100%
thereof shall be provided for).
29Section V: Governance and conduct
21. Board and management
21.1 Fit and proper criteria for directors and CEO
(i) In terms of the provisions of the Act, prior approval of the Reserve Bank is required
for appointment/ re-appointment of a Director or Managing Director (MD)/ Chief
Executive Officer (CEO). ARCs shall undertake due diligence to determine the
suitability of the person for the post based upon track record, integrity and other ‘fit
and proper’ criteria. For this purpose, ARCs shall obtain necessary information and
declaration from the appointed/ existing directors and MD/ CEO in the format enclosed
in Annex II. The Nomination and Remuneration Committee shall scrutinise the
declarations for this purpose. 6ARCs are advised to submit applications, complete in
all respect, along with duly signed Annex III and the documents/ information
mentioned in Annex IV to Department of Regulation7 of the Reserve Bank at least
ninety days before the vacancy arises/ the proposed date of appointment or re-
appointment. Reserve Bank may call for additional information/ documents for
processing the application, if required.
(ii) The declaration in Annex II with updated information shall be obtained from the
directors/ MD/ CEO on an annual basis, as on March 31 of each year. Any change in
position with reference to items in paragraphs 3 and 4 of Annex II shall be
communicated to the Department of Regulation of the Reserve Bank for its
consideration.
(iii) The ARC shall require the directors to execute a covenant in the format enclosed at
Annex V, at the time of their joining the ARC, binding them to discharge their
responsibilities to the best of their abilities, individually and collectively. This deed shall
be preserved by the ARC and should be made available to the Reserve Bank as and
when called for.
6 Circular No. DOR.GOV.REC.79/18.10.006/2023-24 dated February 27, 2024
7 At the address/ email ID mentioned below:
Department of Regulation, Central Office, Central Office Building, 12/13th floor, Shahid Bhagat Singh Marg, Fort,
Mumbai-400001; Tel: 22661602/ 22601000; Email: govcbnbfcdor@rbi.org.in
3021.2 Age of the MD/ CEO and Whole-time Directors (WTDs): No person shall continue
as MD/ CEO or WTD beyond the age of 70 years. Within the overall limit of 70 years, as
part of their internal policy, ARCs’ Boards are free to prescribe a lower retirement age.
21.3 Tenure of MD/ CEO and WTDs: Tenure of MD/ CEO or WTD shall not be for a
period of more than five years at a time and the individual shall be eligible for re-
appointment. However, the post of the MD/ CEO or WTD shall not be held by the same
incumbent for more than fifteen years continuously. Thereafter, the individual shall be
eligible for re-appointment as MD/ CEO or WTD in the same ARC, if considered
necessary and desirable by the Board, after a minimum gap of three years, subject to
meeting other conditions. During this three-years cooling period, the individual shall not
be appointed or associated with the ARC in any capacity, either directly or indirectly. The
ARCs shall put in place appropriate measures to ensure succession planning.
21.4 Chair and meetings of the Board of directors: The Chair of the Board shall be an
independent director. In the absence of the Chair of the Board, meetings of the Board
shall be chaired by an independent director. The quorum for the Board meetings shall be
one-third of the total strength of the Board or three directors, whichever is higher. Further,
at least half of the directors attending the meetings of the Board shall be independent
directors.
21.5 Performance review: The performance of MD/ CEO and WTD shall be reviewed by
the Board annually.
21.6 Committees of the Board: In order to strengthen the oversight by the Board, all
ARCs shall constitute the following committees of the Board:
(i) Audit Committee: ARCs shall constitute an Audit Committee of the Board, which shall
comprise of non-executive directors only. The Chair of the Board shall not be a
member of the Audit Committee. The Audit Committee shall meet at least once in a
quarter with a quorum of three members. The meetings of the Audit Committee shall
be chaired by an independent director who shall not chair any other committee of the
Board. Each of the members of the Audit Committee should have the ability to
31understand the financial statements as well as the notes/ reports attached thereto and
at least one member should have requisite professional expertise/ qualification in
financial accounting or financial management. The Audit Committee shall have the
same powers, functions and duties as laid down in Section 177 of the Companies Act,
2013. In addition, the Audit Committee shall periodically review and assess the
effectiveness of internal control systems, especially with respect to the asset
acquisition procedures and asset reconstruction measures followed by the ARC and
matters related thereto. The Audit Committee shall also ensure that accounting of
management fee/ incentives/ expenses is in compliance with the applicable
regulations.
(ii) Nomination and Remuneration Committee: ARCs shall constitute a Nomination
and Remuneration Committee of the Board which shall have the same powers,
functions and duties as laid down in Section 178 of the Companies Act, 2013. In
addition, the Committee shall ensure 'fit and proper' status of proposed/ existing
directors and sponsors.
22. Fit and Proper criteria for sponsors/ investors
22.1 Determinants of fit and proper status of sponsors of ARCs: In determining
whether the sponsor is fit and proper, Reserve Bank shall take into account all relevant
factors, as appropriate, including but not limited to, the following:
(i) The sponsor’s integrity, reputation, track record and compliance with applicable laws
and regulations;
(ii) The sponsor’s track record and reputation for operating business in a manner that is
consistent with the standards of good corporate governance, integrity, in addition to
the similar assessment of individuals and other entities associated with the sponsor;
(iii) The business record and experience of the sponsor;
(iv) Sources and stability of funds for acquisition and the ability to access financial
markets; and
(v) Shareholding agreements and their impact on control and management of the ARC.
3222.2 Information to be furnished by the sponsors along with relevant supporting
documents
(i) Information by a natural person: Self-declaration as per Form I (Part A, B and C) as
provided in Annex VI.
(ii) Information by a legal person: Self-declaration as per Form I (Part A, B, C and D) as
provided in Annex VI.
(iii) The ARC should furnish additional information as per Form I (Part E) as provided in
Annex VI.
22.3 Continuous monitoring arrangements for due diligence in case of existing
sponsors
(i) For the purpose of ensuring that all its sponsors are fit and proper, every ARC shall
(a) obtain within one month of the close of the financial year a declaration from all its
sponsors in Form I as provided in Annex VI
(b) furnish a certificate in Form III as provided in Annex VI, by the end of May every
year, to the Reserve Bank on the changes in the status of the sponsor.
(ii) Every ARC shall examine any information on the sponsors which may come to its
notice that may render such persons not fit and proper to hold such shares and shall
immediately furnish a report on the same to the Reserve Bank.
22.4 Prior approval for any substantial change in management by way of transfer
of shares
(i) Notwithstanding anything to the contrary contained in the terms and conditions
stipulated in the CoR issued under Section 3 of the Act, ARCs shall obtain prior
approval of the Reserve Bank only for transfers that result in substantial change in
management namely –
(a) any transfer or fresh issuance of shares resulting in a new sponsor
(b) any transfer or fresh issuance of shares resulting in cessation of an existing
sponsor
(c) an aggregate transfer of 10% or more of the total paid up share capital of the ARC
by a sponsor during the period of five years commencing from the date of the CoR
33Explanation III: For the purposes of this clause, a transfer shall be deemed to be a
transfer of more than 10% of the total paid up share capital of the ARC if the aggregate
of all the transfer of shares made by the sponsor prior to that transfer, and including
that transfer, is 10% or more of the total paid up share capital of the ARC.
(ii) The ARCs shall make an application along with Form II as provided in Annex VI and
information mentioned at paragraph 22.2 above, for Reserve Bank’s prior approval for
change in shareholding of the ARCs.
(iii) The Reserve Bank shall, inter alia, seek feedback on the persons from other domestic
as well as foreign regulators and enforcement and investigative agencies as deemed
appropriate to make an assessment on whether a sponsor is fit and proper.
22.5 Investment in ARCs from FATF non-compliant jurisdictions8
(i) New investors from or through non-compliant Financial Action Task Force (FATF)
jurisdictions9, whether in existing ARCs or in companies seeking CoR, are not allowed
to directly or indirectly acquire ‘significant influence’ in the investee, as defined in the
applicable accounting standards. In other words, fresh investors (directly or indirectly)
from such jurisdictions in aggregate should be less than the threshold of 20% of the
voting power (including potential10 voting power) of the ARC.
(ii) Existing investors in ARCs as on February 12, 2021 holding their investments prior to
the classification of the source or intermediate jurisdiction/s as FATF non-compliant
8 Circular No. DOR.CO.LIC.CC No.119/03.10.001/2020-21 dated February 12, 2021
9 The FATF periodically identifies jurisdictions with weak measures to combat money laundering and terrorist
financing (AML/CFT) in its following publications: (a) High-Risk Jurisdictions subject to a Call for Action, and (b)
Jurisdictions under Increased Monitoring. A jurisdiction, whose name does not appear in the 2 aforementioned lists,
shall be referred to as a FATF compliant jurisdiction.
10 Potential voting power could arise from instruments that are convertible into equity, other instruments with
contingent voting rights, contractual arrangements, etc. that grant investors voting rights (including contingent
voting rights) in the future. In such cases, it should be ensured that new investments from FATF non-compliant
jurisdictions are less than both (i) 20% of the existing voting powers and (ii) 20% of existing and potential voting
powers assuming those potential voting rights have materialised.
34may continue with the investments or bring in additional investments as per extant
regulations so as to support continuity of business in India.
23. Fair Practices Code (FPC)
23.1 In order to achieve the highest standards of transparency and fairness in dealing
with stakeholders, ARCs are advised to put in place a Board-approved FPC. The FPC
must be followed in letter & spirit and its implementation needs to be monitored by the
Board. The following paragraphs provide the minimum regulatory expectation while each
ARC’s Board is free to enhance its scope and coverage:
(i) The ARC shall follow transparent and non-discriminatory practices in acquisition of
assets. It shall maintain arm’s length distance in the pursuit of transparency.
(ii) In order to enhance transparency in the process of sale of secured assets,
a) invitation for participation in auction shall be publicly solicited; the process should
enable participation of as many prospective buyers as possible;
b) terms and conditions of such sale may be decided in wider consultation with
investors in the SRs as per the Act; and
c) ARCs shall ensure compliance with Section 29A11 of the IBC in dealing with the
prospective buyers.
(iii) ARCs shall release all securities on repayment of dues or on realisation of the
outstanding amount of loan, subject to any legitimate right or lien for any other claim
they may have against the borrower. If such right of set off is to be exercised, the
borrower shall be given notice about the same with full particulars about the remaining
claims and the conditions under which the ARCs are entitled to retain the securities
till the relevant claim is settled/ paid.
11 Section 29A of the IBC includes in its purview such persons or any other person acting jointly or in concert with
such persons who are considered ineligible to submit a resolution plan viz., (i) undischarged insolvents, (ii) wilful
defaulters, (iii) persons managing/ controlling accounts classified as NPA for more than one year, (iv) persons
convicted for any offence punishable with imprisonment for two years or more, (v) disqualified directors under
Companies Act, (vi) persons prohibited from trading in securities by SEBI, (vii) persons against whom order has been
made by the adjudicating authority for preferential/ undervalued/ extortionate credit/ fraudulent transactions, (viii)
guarantors to a corporate debtor against which an application for insolvency resolution has been admitted under
IBC, (ix) persons subjected to the above listed disabilities under any law in a jurisdiction outside India, and (x)
connected persons to ineligible persons mentioned under Section 29 A.
35(iv) ARCs shall put in place a Board-approved policy on the management fee, expenses
and incentives, if any, claimed from trusts under their management. The Board-
approved policy should be transparent and ensure that management fee is reasonable
and proportionate to the financial transactions.
(v) Any management fee/ incentives charged towards the asset reconstruction or
securitisation activity shall come only from the recovery effected from the underlying
financial assets. The Board-approved policy shall indicate the quantitative cap/ limit
on the management fee/ incentives under various scenarios, any deviation from which
shall require approval of the Board.
(vi) ARCs intending to outsource any of their activity shall put in place a comprehensive
Board-approved outsourcing policy which incorporates, inter alia, criteria for selection
of such activities as well as service providers, delegation of authority depending on
risks and materiality and systems to monitor and review the operations of these
activities/ service providers. ARCs shall ensure that outsourcing arrangements neither
diminish their ability to fulfil their obligations to customers and the Reserve Bank nor
impede effective supervision by the Reserve Bank. The information about outsourced
agency, if owned/ controlled by a director of the ARC, shall be disclosed by the ARC
under the disclosures provided in paragraph 27 of these Directions.
(vii) In the matter of recovery of loans, ARCs shall not resort to harassment of the debtor.
ARCs shall ensure that the staff are adequately trained to deal with customers in an
appropriate manner.
a) ARCs shall put in place a Board-approved code of conduct for recovery agents
and obtain their undertaking to abide by that code. ARCs, as principals, are
responsible for the actions of their recovery agents.
b) It is essential that the recovery agents observe strict customer confidentiality.
c) ARCs shall ensure that recovery agents are properly trained to handle their
responsibilities with care and sensitivity, particularly in respect of aspects such as
hours of calling, privacy of customer information, etc. They should ensure that
36recovery agents do not induce adoption of uncivilized, unlawful and questionable
behaviour or recovery process.
d) 12ARCs shall ensure that they or their agents do not resort to intimidation or
harassment of any kind, either verbal or physical, against any person in their debt
collection efforts, including acts intended to humiliate publicly or intrude upon the
privacy of the debtors' family members, referees and friends, sending
inappropriate messages either on mobile or through social media, making
threatening and/ or anonymous calls, persistently13 calling the borrower and/ or
calling the borrower before 8:00 a.m. and after 7:00 p.m. for recovery of overdue
loans, making false and misleading representations, etc.
(viii) ARCs should constitute a grievance redressal machinery within the organisation.
The name and contact number of designated grievance redressal officer of the ARC
should be mentioned in the communication with the borrowers. The designated officer
should ensure that genuine grievances are redressed promptly. ARCs' grievance
redressal machinery shall also deal with the issues relating to services provided by
the outsourced agency and recovery agents, if any.
(ix) ARCs shall keep the information, they come to acquire in course of their business,
strictly confidential and shall not disclose the same to anyone including other
companies in the group except when (a) required by law; (b) there is duty towards
public to reveal information; or (c) there is borrower’s permission.
(x) Compliance with FPC shall be subject to periodic review by the Board.
23.2 The FPC shall be placed in public domain for information of all stakeholders.
23.3 ARCs shall follow the guidelines issued vide Circular No. DoR.MCS.REC.38/
01.01.001/2023-24 dated September 13, 2023 on ‘Responsible Lending Conduct –
12 Circular No. DOR.ORG.REC.65/21.04.158/2022-23 dated August 12, 2022
13 For example - calling repeatedly
37Release of Movable/ Immovable Property Documents on Repayment/ Settlement of
Personal Loans’.
38Section VI: Accounting and disclosures
24. Guidelines related to accounting
24.1 Every ARC shall prepare its balance sheet and profit and loss account as on 31st
March every year. ARCs are advised to classify all the liabilities due within one year as
‘current liabilities’ and assets maturing within one year along with cash and bank balances
as ‘current assets’ in their balance sheet.
24.2 The accounting policies adopted in preparation and presentation of the financial
statements shall be in conformity with the applicable prudential norms prescribed by the
Reserve Bank.
24.3 Where any of the accounting policies is not in conformity with these guidelines/
instructions, the particulars of departures shall be disclosed together with the reasons
therefor and the financial impact on account thereof. Where such an effect is not
ascertainable, the fact shall be so disclosed citing the reasons therefor.
24.4 An inappropriate treatment of an item in balance sheet or profit and loss account
cannot be deemed to have been rectified either by disclosure of accounting policies used
or by disclosure in notes to balance sheet and profit and loss account.
24.5 ARCs covered by Rule 4 of the Companies (Indian Accounting Standards) Rules,
2015 are required to comply with Indian Accounting Standards (Ind AS) for the
preparation of their financial statements. In order to promote a high quality and consistent
implementation as well as facilitate comparison and better supervision, Reserve Bank
has issued regulatory guidance on Ind AS vide circular DOR (NBFC).CC.PD.No.109/
22.10.106/2019-20 dated March 13, 2020 which, along with subsequent instructions on
the subject, is applicable on such ARCs for preparation of their financial statements from
financial year 2019-20 onwards.
25. Investments
25.1 Considering the nature of investment in SRs where underlying cash flows are
dependent on realisation from NPAs, it can be classified as available for sale. Hence,
39investments in SRs may be aggregated for the purpose of arriving at net depreciation/
appreciation of investments under the category. Net depreciation, if any, shall be provided
for. Net appreciation, if any, should be ignored.
25.2 All other investments should be valued at lower of cost or realisable value. Where
market rates are available, the market value would be presumed to be the realisable value
and in cases, where market rates are not available, the realisable value should be the fair
value. However, investments in other ARCs shall be treated as long term investments
and valued in accordance with the applicable accounting standards.
26. Income recognition
26.1 Yield on SRs should be recognised only after the full redemption of the entire
principal amount of SRs.
26.2 Upside income should be recognized only after full redemption of SRs.
26.3 Management fees should be calculated and charged as a percentage of the NAV
calculated at the lower end of the range of the recovery rating specified by the CRA,
provided that the same is not more than the acquisition value of the underlying asset.
However, management fees are to be reckoned as a percentage of the actual outstanding
value of SRs, before the availability of NAV of SRs.
26.4 Management fees may be recognized on accrual basis. Management fees
recognized during the planning period must be realized within 180 days from the date of
expiry of the planning period. Management fees recognized after the planning period
should be realized within 180 days from the date of recognition. Unrealised management
fees should be reversed thereafter. Further, any unrealized management fees shall be
reversed if, before the prescribed time for realisation, NAV of the SRs fall below 50% of
face value.
4026.5 14ARCs preparing their financial statements as per Ind AS, shall reduce the following
amounts from their NOF while calculating the capital adequacy ratio and the amount
available for payment of dividend:
(i) Management fee recognised during the planning period that remains unrealised
beyond 180 days from the date of expiry of the planning period.
(ii) Management fee recognised after the expiry of the planning period that remains
unrealised beyond 180 days of such recognition.
(iii) Any unrealised management fee, notwithstanding the period for which it has remained
unrealised, where the NAV of the SRs has fallen below 50% of the face value.
The amount reduced from NOF and amount available for payment of dividend shall be
net of any specific expected credit loss allowances held on unrealised management fee
referred to in sub-paragraphs (i), (ii) and (iii) above and the tax implications thereon, if
any. The Audit Committee of the Board shall review the extent of unrealised management
fee and satisfy itself on the recoverability of the same while finalising the financial
statements. It shall be ensured that the management fee is computed strictly in
accordance with extant regulations.
26.6 The income recognition on all other items shall be based on recognised accounting
principles.
26.7 Interest and any other charges in respect of all the NPAs shall be recognised only
when they are actually realised. Any unrealised income recognised by an ARC before the
asset became non-performing and remaining unrealised, shall be derecognised.
26.8 Expenses incurred at pre-acquisition stage for performing due diligence etc. for
acquiring financial assets from banks/ financial institutions should be expensed
immediately by recognizing the same in the statement of profit and loss for the period in
which such expenses are incurred. Expenses incurred at post-acquisition stage for
formation of the trusts, stamp duty, registration, etc. and which are recoverable from the
trusts, should be reversed, if these expenses are not realised within 180 days from the
14 Circular No. DOR.ACC.REC.No.104/21.07.001/2022-23 dated February 20, 2023
41planning period or downgrading of SRs, i.e., NAV is less than 50% of the face value of
SRs, whichever is earlier.
27. Disclosures in the balance sheet: Every ARC shall, in addition to the requirements
of Schedule III of the Companies Act, 2013, prepare the following schedules and annex
them to its balance sheet:
(i) The names and addresses of the banks/ financial institutions from whom financial
assets were acquired and the value at which such assets were acquired from each
such bank/ financial institution
(ii) Segregation of various financial assets industry-wise and sponsor-wise (to be
indicated as a percentage of the total assets)
(iii) Details of related parties as per the accounting standards and the amounts due to and
from them
(iv) A statement clearly charting therein the migration of financial assets from standard to
non-performing
(v) Value of financial assets acquired during the financial year either on its own books or
in the books of the trust
(vi) Value of financial assets realized during the financial year
(vii) Value of financial assets outstanding for realisation as at the end of the financial year
(viii) Value of SRs redeemed partially and the SRs redeemed fully during the financial
year
(ix) Value of SRs pending for redemption as at the end of the financial year
(x) Value of SRs which could not be redeemed as a result of non-realisation of the
financial asset as per the policy formulated by the ARC under paragraph 10.2 or 10.3
(xi) Value of land and/ or building acquired in ordinary course of business of reconstruction
of assets (year wise)
(xii) The basis of valuation of assets if the acquisition value of the assets is more than the
book value of the transferors
(xiii) The details of the assets disposed of (either by write off or by realisation) during the
year at a discount of more than 20% of valuation as on the previous year end and the
reasons therefor
42(xiv) The details of the assets where the value of the SRs has declined more than 20%
below the acquisition value
(xv) 15Information about outsourced agency, if owned/ controlled by a director of the ARC
(xvi) 16Information about assets acquired under IBC including the type and value of
assets acquired, the sector-wise distribution based on business of the corporate
debtor
(xvii) Implementation status of the resolution plans approved by the Adjudicating Authority
on a quarterly basis
(xviii) 17Information on the ageing of the unrealised management fee recognised in their
books in the format specified below as part of the Notes to Accounts in the annual
financial statements (applicable only to ARCs preparing their financial statements as
per Ind AS):
Sr. Parameters As at the end As at the end of
No. of current year previous year
A. Outstanding amount of unrealised
management fee
Out of the above, amount outstanding for:
B. (a) Amounts where the net asset value of
the security receipts has fallen below 50%
of the face value
C. (b) Other amounts unrealised for:
(i) More than 180 days but up to 1 year
(ii) More than 1 year but up to 3 years
(iii) More than 3 years
D. Allowances held for unrealised
management fee (on B and C)
E. Net unrealised management fee (B+C-D)
15 Circular No. DOR.NBFC(ARC) CC. No. 9/26.03.001/2020-21 dated July 16, 2020
16 Circular No. DoR.SIG.FIN.REC.75/26.03.001/2022-23 dated October 11, 2022
17 Circular No. DOR.ACC.REC.No.104/21.07.001/2022-23 dated February 20, 2023
4328. Submission of returns: ARCs shall follow the instructions on submission of returns
contained in Master Direction – Reserve Bank of India (Filing of Supervisory Returns)
Directions – 2024 as amended from time to time.
29. Submission of audited balance sheet: Every ARC shall furnish a copy of its audited
balance sheet along with the Directors' Report/ Auditors' Report every year within one
month from the date of Annual General Body Meeting, in which the audited accounts are
adopted, to the Regional Office of the Department of Supervision of the Reserve Bank
under whose jurisdiction it is registered.
30. Reporting of cases involving change in or takeover of the management of the
business of the borrower: The ARC shall report all cases, where it has taken action to
cause change in or takeover of the management of the business of the borrower for
realisation of its dues from the borrower, to the Department of Supervision of the Reserve
Bank.
31. Display of information - secured assets possessed under the SARFAESI Act,
200218: ARCs shall display information in respect of the borrowers whose secured assets
have been taken into possession by them under the Act. ARCs shall upload this
information on their website in the format given below:
Information on secured assets possessed under the SARFAESI Act, 2002
Registered
Guarantor Registered address of Name of the
Outstanding Details of
Sl. Branch Borrower name address of the Asset Date of asset title holder of
State amount security
No name name (wherever the guarantor classification classification the security
(in ₹) possessed
applicable) borrower (wherever possessed
applicable)
This list shall be updated on monthly basis.
18 Circular No. DoR.FIN.REC.41/20.16.003/2023-24 dated September 25, 2023
44Section VII: Miscellaneous instructions
32. Internal audit: ARCs shall put in place an effective internal control system providing
for periodical checks and review of the asset acquisition procedures and asset
reconstruction measures followed by them and matters related thereto.
33. Guidelines regarding Credit Information Companies
33.119 Submission of information to Credit Information Companies (CICs) by ARCs:
(i) Membership of CICs: ARCs shall become members of all CICs and submit the requisite
data to CICs as per the Uniform Credit Reporting Format prescribed20 by the Reserve
Bank, as amended from time to time.
(ii) Submission of information: ARCs shall keep the information collected/ maintained by
them, updated regularly on a fortnightly basis or at such shorter intervals as mutually
agreed upon between the ARC and the CIC in terms of Regulation 10 (a) (i) and (ii) of the
Credit Information Companies Regulations, 2006.
(iii) Rectification of rejected data: ARCs shall rectify the rejected data received from CICs
and upload the same with the CICs within seven days of receipt of such data.
(iv) Adoption of best practices: ARCs shall have a standard operating procedure (SOP)
in place for CIC related matters which shall, inter alia, include the following best practices:
(a) ARCs shall provide requisite customer information, including identifier information, to
CICs.
(b) ARCs shall ensure that the records submitted to CICs are updated regularly and that
no instances of repayment, including that of the last instalment, are left unreported.
(c) Instances of non-updation of repayment information may be avoided by centralising
the issue of no-objection certificates and providing information to CICs.
19 Circular No.DoR.FIN.REC.No.46/26.03.001/2024-25 dated October 10, 2024
20 Vide Master Direction – Reserve Bank of India (Credit Information Reporting) Directions, 2025 dated January 06,
2025
45(d) ARCs shall appoint a nodal officer for dealing with CICs.
(e) Customer grievance redressal shall be given top priority especially in respect of
complaints relating to updation/ alteration of credit information.
(f) Grievance redressal in respect of credit information should be integrated with the
existing systems, if any, for grievance redressal.
(g) ARCs should abide by the period stipulated under CICRA and the Rules and
Regulations framed thereunder in respect of updation, alteration of credit information,
resolving disputes, etc. Procedure prescribed under Rules 20 and 21 of the Credit
Information Companies Rules, 2006 in this regard should be adhered to. Deviations from
stipulated time limits should be monitored and commented upon in the periodical reports/
reviews put up to the Board.
33.2 ARCs shall follow guidelines prescribed under paragraphs 2 (2), 2 (3), 2 (4) and
Chapter III of Master Direction on Treatment of Wilful Defaulters and Large Defaulters
issued vide circular no. DoR.FIN.REC.No.31/20.16.003/2024-25 dated July 30, 2024, as
amended from time to time.
33.3 ARCs shall follow the guidelines issued vide Master Direction – Reserve Bank of
India (Credit Information Reporting) Directions, 2025 dated January 06, 2025, as
amended from time to time.
34. Filing of transactions with the Central Registry set up under the Act: ARCs shall
file and register the records of all transactions related to securitisation, reconstruction of
financial assets and creation of security interest, if any, with Central Registry of
Securitisation Asset Reconstruction and Security Interest of India (Central Registry).
35. Submission of financial information to Information Utilities: Instructions
contained in the Circular DBR.No.Leg.BC.98/09.08.019/2017-18 dated December 19,
2017 are applicable to the ARCs.
36. Know Your Customer (KYC): ARCs shall follow the Know Your Customer (KYC)
Direction, 2016, as amended from time to time.
4637. Reporting to Indian Banks’ Association (IBA): ARCs shall report to IBA the details
of chartered accountants, advocates and valuers (who have committed serious
irregularities in the course of rendering their professional services) for including in the IBA
database of third-party entities involved in fraud. However, ARCs shall have to ensure
that they follow meticulously the procedural guidelines issued by IBA (Circular No. RB-
II/Fr./Gen/3/1331 dated August 27, 2009) and also give the parties a fair opportunity to
explain their position and justify their action before reporting to IBA. If no reply/ satisfactory
clarification is received from them within one month, ARCs shall report their details to IBA.
ARCs should consider this aspect before assigning any work to such parties in future.
38. Penal consequences for non-compliance: Implementation of these Directions shall
be reviewed under the supervisory process and any non-compliance in this regard shall
be dealt with appropriately in accordance with the provisions of the Act.
39. Repeal provisions
39.1 With the issue of these Directions, the instructions/ guidelines contained in the
circulars mentioned in Annex VII, issued by the Reserve Bank stand repealed.
39.2 All approvals/ acknowledgements given under the mentioned circulars shall be
deemed as given under these Directions.
39.3 All the repealed circulars are deemed to have been in force prior to the coming into
effect of these Directions.
47Annex I: Disclosures related to SRs
(cf. Paragraph 17.7 of these Directions)
I. Disclosures in the offer document
(i) Disclosure relating to the issuer of SRs
a) Name, place of registered office, date of incorporation, date of commencement of
business of the ARC
b) Particulars of sponsors, shareholders, and a brief profile of the Directors on the Board
of the ARC with their qualifications and experience
c) Summary of financial information of the ARC for last five years or since
commencement of business, whichever is shorter
d) Details of securitisation/ asset reconstruction activities handled, if any, in last eight
years or since commencement of business, whichever is shorter. This shall, inter alia,
include track record of returns generated for all SR investors on the schemes floated
in last eight years.
e) Track record of recovery rating migration and engagement with CRAs of schemes
floated in last eight years
f) Whether the scheme envisages the utilization of part of funds raised for restructuring
of financial assets acquired out of such funds? If so, the percentage of funds raised
which shall be utilized for restructuring purposes.
(ii) Terms of offer
a) Objects of offer
b) Description of the instrument giving particulars relating to its form, denomination, issue
price, together with an averment that the transferability of SRs is restricted to the QBs
c) Arrangements made for management of assets and extent of management fee
charged by the ARC
d) Interest rate/ probable yield
e) Terms of payment of principal/ interest, date of maturity/ redemption
f) Servicing and administration arrangement
g) Details of credit rating and rationale for the rating
48h) Description of assets being securitized including date of acquisition, valuation, and the
interest of the ARC in the assets at the time of issue of SRs
i) Geographical distribution of asset pool
j) Residual maturity, interest rates, outstanding principal of the asset pool
k) Nature and value of underlying security, expected cash flows, their quantum and
timing, credit enhancement measures
l) Policy for acquisition of assets and valuation methodology adopted
m) Terms of acquisition of assets from banks/ FIs
n) Details of performance record with the originators
o) Terms of replacement of assets, if any, to the asset pool
p) Statement of risk factors, particularly relating to future cash flows and steps taken to
mitigate the same
q) Arrangements, if any, for implementing asset reconstruction measures in case of
default
r) Duties of the trustee
s) Specific asset reconstruction measures, if any, on which approvals shall be sought
from investors
t) Grievance redressal mechanism
II. Disclosures on quarterly basis
a) Defaults, prepayments, losses, if any, during the quarter
b) Change in credit rating, if any
c) Commonality and conflict of interest, if any, between the ARC and CRA
d) Change in profile of the assets by way of accretion to or realisation of assets from the
existing pool
e) Collection summary for the current and previous quarter
f) Any other material information which has a bearing on the earning prospects affecting
the QBs.
49Annex II: Declaration and undertaking by Director/ MD/ CEO as on __
(cf. Paragraph 21.1 of these Directions)
Name:
1. Relevant relationships of Director/ MD/ CEO
(i) List of relatives, if any, who are connected with the ARC (please refer to sub-section
77 of Section 2 of the Companies Act, 2013)
(ii) List of entities, if any, in which he/ she is considered as being interested (please refer
to sub-section 49 of Section 2 and Section 184 of the Companies Act, 2013)
(iii) List of entities in which he/ she is considered as holding substantial interest
(substantial interest means the beneficial interest held by an individual or any of his/
her relatives, whether singly or taken together, in the shares of a company/ firm, the
aggregate amount paid-up on which exceeds 10% of the paid-up share capital/ capital
of the company/ firm)
(iv) Name of the financial institutions including NBFCs/ ARCs in which he/ she is or has
been a member of the Board (also give details of period during which such office was
held)
(v) Fund and non-fund facilities, if any, presently availed of by him/ her and/ or by entities
listed at 1(ii) and (iii) above from the financial institutions including NBFCs/ ARCs
(vi) Cases, if any, where the director or entities at 1(ii) and (iii) above are in default or have
been in default in the past in respect of credit facilities obtained from financial
institutions including NBFCs/ ARCs
2. Records of professional achievements
Relevant professional achievements
3. Proceedings, if any, against the Director/ MD/ CEO
(i) Whether the director is a member of a professional association/ body? Details of
disciplinary action, if any, pending or commenced or resulting in conviction in the past
against him/ her or whether he/ she has been banned from entry into any profession/
occupation at any time
50(ii) Details of prosecution, if any, pending or commenced or resulting in conviction in the
past against the director and/ or against any of the entities listed at 1(ii) and (iii) above
for violation of economic laws and regulations
(iii) Details of criminal prosecution, if any, pending or commenced or resulting in conviction
in the last five years against the director
(iv) Whether the director attracts any of the disqualifications envisaged under the Section
164 of the Companies Act, 2013? If so, details thereof.
(v) Has the director or any of the entities at 1(ii) and 1(iii) above been subject to any
investigation at the instance of any Government department or agency? If so, details
thereof.
(vi) Has the director at any time been found guilty of violation of rules/ regulations/
legislative requirements by customs/ excise/ income tax/ foreign exchange/ other
revenue authorities? If so, details thereof.
(vii) Whether the director has at any time come to the adverse notice of a regulator such
as RBI, SEBI, IRDA, MCA, etc.?
(viii) Whether the director has been declared as a wilful defaulter at any time in the
preceding five years?
(ix) Whether the director is continuing as a wilful defaulter?
4. Any other explanation/ information considered relevant for judging the Director/
MD/ CEO, fit and proper
Undertaking
I confirm that the above information is, to the best of my knowledge and belief, true and
complete. I undertake to keep the Board of the ARC fully informed, as soon as possible,
of all events which take place subsequent to my appointment which are relevant to the
information provided above.
*I also undertake to execute the ‘Deed of Covenant’ required to be executed by the
directors of the ARC.
Place : Signature :
Date : Name :
* Applicable only for directors
51Remarks of Nomination and Remuneration Committee (NRC) of having satisfied
itself that the above information is true and complete.
Place : Signature of the Chair of the NRC:
Date : Name :
52Annex III: Information About the Director/ MD/ CEO
(cf. Paragraph 21.1 of these Directions)
Name of ARC:
Sr.
Particulars Information/ details
No.
1. Name of the candidate (proposed appointee)
2. Proposed designation/ Type of directorship
[Such as Whole-time Director/ Managing Director/ Chief
Executive Officer/ Non-executive Director (sponsor/non-
sponsor), Independent Director, Nominee Director, etc.
(to be clearly specified)]
3. Nationality & Passport No.
4. Date of Birth (DD/MM/YYYY)
5. Address, e-mail ID and phone/mobile number
6. Permanent Account Number (PAN) PAN:
Details of income tax returns filed during the last
Date of filing Amount of tax paid (₹)
3 years
7. Director Identification Number (DIN) and current
status thereof
8. Educational/ Professional qualifications
9. Line of Business or Vocation/ Profession
(A brief write-up detailing the relevant knowledge and
professional experience of the candidate)
10. Details of bank accounts of the candidate across Bank Type
A/c Number
all jurisdictions Name of A/c
(Please mention details of all accounts such as savings,
current, loans and advances, etc.)
11. Equity shareholding21, if any, of the candidate in
the applicant ARC:
(i) Number of shares
(ii) Face value of shares
(iii) Percentage to total paid-up share capital of
the ARC
12. Whether the candidate is a nominee of or
related/associated with any of the sponsor/s? If
yes, details thereof.
21 Please also include details of preference shares, compulsorily convertible debentures, etc., if any, separately.
5313. List of relatives22 of the candidate, who are
connected with the ARC (if any), and nature of
such connection
14. Present and past23 occupations (other than
those covered at Sr. No. 15)
[Designation/Role, Name and address of the
organisation, Employee ID, Tenure (from-to), Name of
the regulator (if regulated by a financial sector regulator
in India or abroad)]
15. Names of banks, financial institutions (including
NBFCs/ ARCs) and other entities in which the
candidate has been chairman / managing
director / director / chief executive officer, etc.
[Name and address of the organisation and its line of
activity, Position held, Tenure (from-to), Name of the
regulator (if regulated by a financial sector regulator in
India or abroad)]
16. List of entities in which the candidate is
considered as interested24 or holding
substantial interest25 and its regulator
17. Whether the candidate or the entities listed at
(15) and (16) above are or have in the past been
in default26 in respect of any credit facilities
(fund/ non-fund-based) obtained from banks/
financial institutions
[If yes, please furnish full details such as name of the
lender (including the branch name), type of facility,
period and quantum of default, etc. and present status
thereof]
18. Whether the person is a member of any
professional association/ body.
If yes, details of disciplinary action against him/
her, if any, commenced, pending or resulting in
conviction in the past, or whether he/ she has
been banned from any profession/ occupation at
any time.
19. Details of civil or criminal prosecution (including
under Section 138 (1) of the Negotiable
Instruments Act, 1881), if any, against the
22 Refer to Section 2(77) of the Companies Act, 2013.
23 At least during the last 10 years
24 Refer to Section 184 of the Companies Act, 2013.
25 Substantial interest means the beneficial interest held by an individual or his/her spouse or minor child, whether
singly or taken together, in the shares of a company/ capital of a firm, the aggregate amount paid-up on which
exceeds ten percent of the paid-up share capital of the company or total capital subscribed by all the partners of a
partnership firm.
26 ‘Default’ means that the concerned facility has/had been classified as a non-performing asset by the bank/FI.
54candidate and/ or against any of the entities
listed in (15) and (16) above initiated, pending or
resulting in conviction in the past for violation of
economic laws/ regulations.
20. If the candidate has indulged in any breach of
AML/CFT guidelines at any time, details thereof.
21. Whether the candidate attracts any of the
disqualification envisaged under the Section
164 of the Companies Act, 2013?
If yes, please give details thereof.
22. (a) If convicted by a criminal court of an offence
involving moral turpitude, details thereof.
(b) If convicted by any other court of law, details
thereof along with outcome of such
proceedings.
23. If the candidate or any of the entities listed at
(15) and (16) above has been subject to any
investigation or vigilance/ disciplinary enquiry by
any of the previous employers or government
departments or agencies, details thereof along
with outcome of such proceedings.
24. If the candidate or the entities listed at (15) and
(16) above have at any time been found guilty of
violation of rules/ legislative requirements by
customs/ excise/ income tax/ foreign exchange/
other revenue authorities/ investigative
agencies (including issuance of show cause
notice), details thereof.
25. If reprimanded, censured, restricted,
suspended, barred, enjoined, or otherwise
sanctioned by any regulator such as RBI, SEBI,
IRDAI, PFRDA, MCA, professional
organisations, government agencies or court
because of professional conduct or activities,
the details thereof27.
26. If the candidate is a professional (such as a
chartered accountant, an advocate, etc.) and is
undertaking or has undertaken professional
work in any ARC, please provide the details
(including the name of the ARC and the period
of association)
27 Though it shall not be necessary for a candidate to mention herein about the orders and findings which have been
later on reversed/ set aside in toto, it would be necessary to make a mention of the same in case the reversal /
setting aside is on technical reasons like limitation or lack of jurisdiction, and not on merit. If the order is temporarily
stayed and the appeal proceedings are pending, the same should also be mentioned.
5527. Whether the candidate has been declared a
wilful defaulter at any time in the last five years
by any bank. If yes, details and present status
thereof.
28. Whether the number of directorship held by the
candidate exceeds the limits prescribed under
Section 165 of the Companies Act, 2013/SEBI’s
(Listing Obligations and Disclosure
Requirements) Regulations, 2015 (as
applicable).
29. Any other information considered relevant for
assessing the person as ‘fit and proper’.
Declaration by the proposed appointee
1. I confirm that I am not associated with any unincorporated body which is accepting public deposits.
2. I confirm that I am not associated with any company, the application for Certificate of Registration
(CoR) of which has been rejected by the Reserve Bank of India, National Housing Bank or any
other financial sector regulator.
Undertaking by the proposed appointee
1. I confirm that the above information is, to the best of my knowledge and belief, true and complete.
2. I undertake to keep the Company fully informed, as soon as possible, of all events which take place
after submission of this application or after my appointment, which are relevant to the information
provided herein above.
3. I also undertake to execute a ‘Deed of Covenant’ with the Company.
Place:
Date: Signature of the proposed appointee
Submission of Nomination and Remuneration Committee (NRC)
Confirmation that necessary due diligence in respect of
the proposed appointee has been carried out by the
NRC.
Remarks of the NRC about having satisfied itself that
the information provided herein is true and complete.
Place: Signature of Chair of the NRC
Date: Name:
Duly filled in form must be signed by the candidate (proposed appointee) and countersigned by the chairperson of the
Nomination and Remuneration Committee of the ARC.
56Annex IV: An indicative list of documents/ information to be furnished along with
the application
(cf. Paragraph 21.1 of these Directions)
Sr Requirements to be complied with and documents to be submitted to Page
No. RBI No.
i. Covering Letter by the ARC submitting the application for prior approval for
appointment/ re-appointment of Director, Managing Director or CEO, duly
signed by the authorised signatory (with Company’s seal)
ii. Identity document of the candidate – PAN Card/ Election Card/ Driving
License/ Passport/ Aadhaar Card (any one)
iii. Credit Information Report (Score + Full Report) (not older than 6 months)
[Explanation for adverse remarks/features, if any, in the report should also be submitted]
iv. Banker’s Report for all accounts (both deposit and loan/advance accounts)
where the candidate is an account holder (in the bank’s sealed cover)
v. Board Resolution proposing the appointment/ re-appointment of the director/
MD/ CEO, including the proposed tenure
vi. Declaration on the status of supervisory compliances by the ARC
vii. a) Confirmation whether there has been any change in the shareholding
pattern which has led to the proposed appointment
(b) Shareholding pattern of the ARC
viii. Composition of the Board before appointment of the proposed director (with
designation, date of appointment, tenure, DIN, etc)
ix. Confirmation whether SEBI’s LODR guidelines are applicable to the ARC or
not?
57Annex V: Form of deed of covenants with a Director
(cf. Paragraph 21.1 of these Directions)
THIS DEED OF COVENANTS is made this ________ day of ________Two thousand
_______ BETWEEN _________, having its registered office at____________(hereinafter
called the ‘ARC’) of the one part and Mr./ Ms __________ of ____________ (hereinafter
called the ‘Director’) of the other part.
WHEREAS
A. The Director has been appointed as a director on the Board of Directors of the ARC
(hereinafter called ‘the Board’) and as a term of his/ her appointment, is required to enter
into a Deed of Covenants with the ARC.
B. The Director has agreed to enter into this Deed of Covenants pursuant to his/ her said
terms of appointment which has been approved by the Board.
NOW IT IS HEREBY AGREED AND THIS DEED OF COVENANTS WITNESSETH AS
FOLLOWS :
1. The Director acknowledges that his/ her appointment as director on the Board of the
ARC is subject to applicable laws and regulations including the Memorandum and Articles
of Association of the ARC and the provisions of this Deed of Covenants.
2. The Director covenants with the ARC that:
(i) The Director shall disclose to the Board the nature of his/ her interest, direct or indirect,
if he/ she has any interest in or is concerned with a contract or arrangement or any
proposed contract or arrangement entered into or to be entered into between the ARC
and any other person, immediately upon becoming aware of the same or at meeting
of the Board at which the question of entering into such contract or arrangement is
taken into consideration or if the director was not at the date of that meeting concerned
or interested in such proposed contract or arrangement, then at the first meeting of
the Board held after he/ she becomes so concerned or interested and in case of any
58other contract or arrangement, the required disclosure shall be made at the first
meeting of the Board held after the Director becomes concerned or interested in the
contract or arrangement.
(ii) The Director shall disclose by general notice to the Board his/ her other directorships,
his/ her memberships of bodies corporate, his/ her interest in other entities and his/
her interest as a partner or proprietor of firms and shall keep the Board apprised of all
changes therein.
(iii) The Director shall provide to the ARC a list of his/ her relatives as defined in the
Companies Act, 2013 and to the extent the Director is aware of directorships and
interests of such relatives in other body corporate, firms and other entities.
(iv) The Director shall in carrying on his/ her duties as director of the ARC:
a) use such degree of skill as may be reasonable to expect from a person with his/
her knowledge or experience
b) in the performance of his/ her duties take such care as he/ she might be reasonably
expected to take on his/ her own behalf and exercise any power vested in him/ her
in good faith and in the interests of the ARC
c) keep himself/ herself informed about the business, activities and financial status of
the ARC to the extent disclosed to him/ her
d) attend meetings of the Board and Committees thereof (collectively for the sake of
brevity hereinafter referred to as the ‘Board’) with fair regularity and conscientiously
fulfil his/ her obligations as director of the ARC
e) not seek to influence any decision of the Board for any consideration other than in
the interests of the ARC
f) bring independent judgment to bear on all matters affecting the ARC brought
before the Board including but not limited to statutory compliances, performance
reviews, compliances with internal control systems and procedures, key executive
appointments and standards of conduct
g) in exercise of his/ her judgement in matters brought before the Board or entrusted
to him/ her by the Board be free from any business or other relationship which
could materially interfere with the exercise of his/ her independent judgement
59h) express his/ her views and opinions at the Board meetings without any fear or
favour and without any influence on exercise of his/ her independent judgement
(v) The Director shall have:
a) fiduciary duty to act in good faith and in the interests of the ARC and not for any
collateral purpose
b) duty to act only within the powers as laid down by the ARC’s Memorandum and
Articles of Association and by applicable laws and regulations; and
c) duty to acquire proper understanding of the business of the ARC
(vi) The Director shall:
a) not evade responsibility in regard to matters entrusted to him/ her by the Board
b) not interfere in the performance of their duties by the whole-time directors and
other officers of the ARC and wherever the director has reasons to believe
otherwise, he/ she shall forthwith disclose his/ her concerns to the Board; and
c) not make improper use of information disclosed to him/ her as a member of the
Board for his/ her or someone else’s advantage or benefit and shall use the
information disclosed to him/ her by the ARC in his/ her capacity as director of the
ARC only for the purposes of performance of his/ her duties as a director and not
for any other purpose
3. The ARC covenants with the Director that:
(i) the ARC shall apprise the Director about the:
a) Board procedures including identification of legal and other duties of Director and
required compliances with statutory obligations
b) control systems and procedures
c) matters in which Director should not participate because of his/ her interest, direct
or indirect therein
d) qualification requirements and provide copies of Memorandum and Articles of
Association
e) corporate policies and procedures
f) insider dealing restrictions
60g) constitution of, delegation of authority to and terms of reference of various
committees constituted by the Board
h) appointments of Senior Executives and their authority
i) remuneration policy
j) deliberations of committees of the Board
k) changes in policies, procedures, control systems, applicable regulations including
Memorandum and Articles of Association of the ARC, delegation of authority,
Senior Executives.
(ii) the ARC shall disclose and provide to the Board including the Director all information
which is reasonably required for them to carry out their functions and duties as a
director of the ARC and to take informed decisions in respect of matters brought before
the Board for its consideration or entrusted to the Director by the Board or any
committee thereof
(iii) the disclosures to be made by the ARC to the directors shall include but not be limited
to the following:
a) all relevant information for taking informed decisions in respect of matters brought
before the Board
b) ARC’s strategic and business plans and forecasts
c) organisational structure of the ARC and delegation of authority
d) corporate and management controls and systems including procedures
e) economic features and marketing environment
f) information and updates on major expenditure
g) periodic reviews of performance of the ARC
h) periodic reports about implementation of strategic initiatives and plans
(iv) the ARC shall communicate the outcome of Board deliberations to directors and
concerned personnel and prepare and circulate minutes of meetings of the Board to
directors in a timely manner and to the extent possible within 2 business days of the
date of conclusion of the Board meeting
61(v) advise the Director about the levels of authority delegated in matters placed before
the Board
4. The ARC shall provide to the Director periodic reports on the functioning of internal
control systems including effectiveness thereof.
5. The Director shall not assign, transfer, sublet or encumber his/ her office and his/ her
rights and obligations as director of the ARC to any third party provided that nothing herein
contained shall be construed to prohibit delegation of any authority, power, function or
delegation by the Board or any committee thereof subject to applicable laws and
regulations including Memorandum and Articles of Association of the ARC.
6. The failure on the part of either party hereto to perform, discharge, observe or comply
with any obligation or duty shall not be deemed to be a waiver thereof nor shall it operate
as a bar to the performance, observance, discharge or compliance thereof at any time or
times thereafter.
7. Any and all amendments and/ or supplements and/ or alterations to this Deed of
Covenants shall be valid and effectual only if in writing and signed by the Director and the
duly authorised representative of the ARC.
8. This Deed of Covenants has been executed in duplicate and both the copies shall be
deemed to be originals.
IN WITNESS WHEREOF THE PARTIES HAVE DULY EXECUTED THIS AGREEMENT
ON THE DAY, MONTH AND YEAR FIRST ABOVE WRITTEN.
For the ARC Director
Signature: Signature:
Name: Name:
Title:
Date:
In the presence of:
1.
2.
62Annex VI
(cf. Paragraph 22 of these Directions)
Form I: Declaration to be submitted by the sponsor
Name of the ARC :
Sl. No. Particulars Remarks
Part A
1. Name of the sponsor (including previous names, if any,
along with date of such changes)
2. Present & permanent address of the sponsor
3. Registered & corporate office address of the sponsor
4. Occupation/ nature of business of the sponsor
5. Citizenship and resident status if the sponsor is an
individual/ ownership and control status if the sponsor is an
entity (as per FEMA)
6. Date of birth / incorporation
7. CIN/ Registration No./ PAN/ TAN
8. Details of bank accounts - bank, branch and account no.
9. Profitability and average income for the last 3 years and
net worth (duly certified by the statutory auditors)
10. Source of funds for acquisition of shares/ compulsorily
convertible preference shares/ debentures/ bonds (duly
certified by the statutory auditors)
11. Income tax returns and audited financial statements of the
sponsor for the last 3 years
12. Details of directorship/ shareholding/ voting rights/
compulsorily convertible preference shares/ debentures/
bonds, etc. of the sponsor in banks and other institutions in
the financial sector
63Sl. No. Particulars Remarks
13. Details of acquisition by the sponsor (shareholding in ₹ and
%) in the ARC
14. Whether any other person has beneficial interest in the
proposed acquisition
15. Detailed profile on the background and experience of the
sponsor, expertise and track record of business
16. Whether the sponsor is a financial sector entity/
Government/ public sector undertaking
17. Whether the sponsor has been declared as a wilful
defaulter at any time in the preceding 5 years
If yes, whether the sponsor continues to be a wilful
defaulter
Part B
18. (A) List of ‘Relatives’ of the sponsor
(B) List of ‘Persons acting in concert’ with the sponsor
(C) List of Associate Enterprises of the sponsor
(D) List of Entities which hold 10% or more of the paid-up
share capital of the sponsor
(E) List of HUFs where the Sponsor or his family member
is a member/ karta
(F) List of entities in which the HUF at (E) above is holding
10% or more of the paid-up share capital of that entity
(G) List of entities in which the Sponsor is holding 10% or
more of the paid-up share capital of that entity
(H) Entities, if any, in which the Sponsor is considered as
being interested (Refer Section 184 of Companies Act,
2013)
(I) Entities where there are common shareholders of the
sponsor who collectively hold 20% or more of the paid-up
share capital of the Sponsor and also those entities
(J) Related Party (Refer AS 18) of the Sponsor
Explanation: For the purpose of this part,
64Sl. No. Particulars Remarks
(i) “Relatives” means ‘relatives’ as defined in Section 2(77)
of the Companies Act 2013.
(ii) Persons shall be deemed to be “acting in concert” who,
for a common objective or purpose of acquisition of shares
in excess of 10%, pursuant to an agreement or
understanding (formal or informal) directly or indirectly
cooperate by acquiring or agreeing to acquire shares in the
ARC;
(iii) ‘Associate enterprises of the sponsor’, means a
company whether incorporated or not, which
(a) is a holding company or a subsidiary company of
the sponsor; or
(b) is a joint venture (defined in terms of AS 23) of
the sponsor; or
(c) controls the composition of the Board of
Directors or other body governing the sponsor;
or
(d) is able to obtain economic benefits from the
activities of the sponsor.
Part C
19. Has the sponsor or the persons/ entities listed in Part B
been adjudged bankrupt/insolvent at any time
20.* If the sponsor or the persons/ entities listed in Part B is a
member of a professional association/ body, details of
disciplinary action, if any, pending or commenced or
resulting in conviction in the past against him/ her or
whether he/ she has been banned from entry at any
profession/ occupation at any time
21.* Details of serious disciplinary or criminal prosecution, if
any, pending or commenced or resulting in conviction in the
past against the sponsor or the persons/ entities listed in
Part B
22.* Has the sponsor or the persons/ entities listed in Part B at
any time been found guilty of violation of rules/ legislative
65Sl. No. Particulars Remarks
requirements by customs/ excise/ income tax/ foreign
exchange/ other revenue authorities/ investigative
agencies/ economic laws/ any regulation, including
issuance of Show Cause Notice, if so, give particulars
23. Whether the sponsor or the persons/ entities listed in Part
B have been convicted for any offence due to dishonesty,
incompetence or malpractice under any legislation
designed to protect members of the public from financial
loss
24. Whether the persons/ entities listed in Part B has been
declared as a wilful defaulter at any time in the preceding 5
years? If yes, whether he/she continues as a wilful
defaulter?
Part D
25. If the sponsor is a regulated entity, names and addresses
of the regulators of the sponsor in India and abroad
26. Shareholding pattern of the sponsor
27. Details of capital raised by the sponsor during the past 3
years
28. Detailed corporate structure of the Group in case the
sponsor belongs to a Group (preferably in a pictorial form)
*Though it shall not be necessary for a person to mention in the column about orders and
findings made by regulators which have been later on reversed / set aside in toto,
however, it would be necessary to make a mention of the same, in case the reversal /
setting aside is on technical reasons like limitation or lack of jurisdiction, etc., and not on
merit. If the order of the regulator is temporarily stayed and the appellate / court
proceedings are pending, the same also should be mentioned.
66Undertaking
I confirm that the above information to the best of my knowledge and belief, is true and
complete. I undertake to keep the ARC fully informed, as soon as possible, of all events
which take place subsequent to submission of this declaration, which are relevant to the
information provided above.
Signature and stamp of the sponsor
Place :
Date :
I solemnly declare that to the best of my knowledge and belief the information furnished
in the statement above is correct, complete, and truly stated.
Signature of Authorised Official of the Company
Name :
Designation :
Company Seal :
Date :
Place :
PART E
Additional information to be submitted by the ARC
Sl. No. Particulars Remarks
29. Any other explanation / information in regard
to items above considered relevant for
judging “fit and proper” status of the sponsor
30. Brief details of shareholder agreements
Signature of Authorised Official of the Company
Name :
Designation :
Company Seal :
Date :
Place :
67Form II: Information to be furnished to the Reserve Bank by the ARC while
forwarding the application for seeking prior approval of sponsors
Sl. Particulars Remarks
No.
1. Name of the ARC
2. Paid-up share capital of the ARC
3. Name of the existing sponsors of the ARC
4. Name of the proposed sponsor
5. Proposed sponsor’s track record on integrity and
reputation
6. Report of the ARC on the acquisition (based on a review
by the Board of Directors)
7. Whether the proposed sponsor is resident or non-resident
8. Whether the proposed sponsor or persons/ entities listed in
Part B of Form I has been subject to any proceedings of
serious disciplinary or criminal nature
Encl :
(i) Report of the ARC
(ii) Copy of the Board Resolution
(iii) Form I for individual sponsors
Signature of Authorised Official of the Company
Name :
Designation :
Company Seal :
Date :
Place :
68Form III: Annual declaration (as on March 31 every year) to be furnished to the
ARC by all the existing sponsors of ARCs
Name of the ARC:
Sl. Particulars Remarks
No.
1. Name of the sponsor
2. Address of the sponsor
3. Occupation of the sponsor (in case of individuals)
4. Total number of shares /compulsorily convertible preference
shares/ debentures /bonds held by the sponsor in the ARC
5. Date/s of acquisition of shares/ compulsorily convertible
preference shares/ debentures/ bonds in the ARC in the past 5
years
6. Details of regulatory actions against the sponsors and persons/
entities listed in Part B of Form I by regulators in India or abroad,
during the last 5 years
7. Whether there have been any criminal proceedings against the
sponsor and persons/ entities listed in Part B of Form I during
the last 5 years, if so, details thereof.
8. Whether there have been any civil proceedings against the
sponsor and persons/ entities listed in Part B of Form I during
the last 5 years, if so, details thereof.
9. Change of ownership of the sponsor in the last 5 years (in case
of entities), if any
Signature and stamp of the sponsor
Place :
Date :
69Annex VII: List of repealed circulars
Sr. Circular No. Date Subject
No.
1 DNBS.PD.CC.1/SCR April 23, Securitisation and Reconstruction of
C/10.30/2002-03 2003 Financial Assets and Enforcement of
Security Interest Act, 2002 - Issue of final
guidelines and directions
2 DNBS.PD.CC.2/SCR March 29, The Securitisation Companies and
C/10.30/2003-04 2004 Reconstruction Companies (Reserve Bank)
Guidelines and Directions, 2003
3 DNBS.PD.CC.3/SCR September The Securitisation Companies and
C/10.30.000/2006-07 20, 2006 Reconstruction Companies (Reserve Bank)
Guidelines and Directions, 2003
4 DNBS.PD.CC.4/SCR October The Securitisation Companies and
C/10.30.000/2006-07 19, 2006 Reconstruction Companies (Reserve Bank)
(Amendment) Guidelines and Directions,
2006
5 DNBS.(PD)CC.No.5/S April 25, Quarterly Statement to be submitted by
CRC/10.30.000/2006- 2007 Securitisation Companies/ Reconstruction
07 Companies registered with the Reserve
Bank of India under Section 3(4) of the
SARFAESI Act
6 DNBS.(PD)CC.No.6/S May 28, Guidelines on declaration of Net Asset
CRC/10.30.049/2006- 2007 Value of Security Receipts issued by
07 Securitisation Company/ Reconstruction
Company
7 DNBS.(PD)CC.No.8/S March 5, Regulation of SCs/RCs-submission of
CRC/10.30.000/2007- 2008 returns and audited balance sheet by
08 SCs/RCs
8 DNBS.(PD)CC.No.9/S April 22, Regulation of SCs/RCs-disclosure while
CRC/10.30.000/2007- 2008 issuing Security Receipts(SRs)
08
9 DNBS.(PD)CC.No.12/ September Quarterly Statement to be submitted by
SCRC/10.30.000/200 26, 2008 Securitisation Companies/ Reconstruction
8-09 Companies registered with the Reserve
Bank of India under Section 3(4) of the
SARFAESI Act
70Sr. Circular No. Date Subject
No.
10 DNBS/PD(SC/RC)CC. April 22, Acquisition of Financial Assets by
No.13/26.03.001/2008 2009 Securitisation Companies/ Reconstruction
-09 Companies (SC/RCs) - Clarifications
11 DNBS(PD)CC.No.14/ April 24, Resolution of acquired assets - Extension in
SCRC/26.01.001/200 2009 time frame for redemption of security
8-09 receipts (SRs) issued
12 DNBS.(PD).CC.No.17 April 21, Guidelines on Change in or Take Over of
/SCRC/26.03.001/200 2010 the Management of the Business of the
9-2010 Borrower by Securitisation Companies and
Reconstruction Companies (Reserve Bank)
Guidelines, 2010
13 DNBS.(PD).CC.No.18 April 21, The Securitisation Companies and
/SCRC/26.03.001/200 2010 Reconstruction Companies (Reserve Bank)
9-2010 Guidelines and Directions, 2003 –
Amendments
14 DNBS.(PD).CC.No.19 April 21, The Securitisation Companies and
/SCRC/26.03.001/200 2010 Reconstruction Companies (Reserve Bank)
9-2010 Guidelines and Directions, 2003 –
Amendments
15 DNBS.(PD).CC.No.23 November Submission of information to Credit
/SCRC/26.03.001/201 25, 2010 Information Companies
0-2011
16 DNBS.(PD).CC.No.24 May 25, Setting up of Central Electronic Registry
/SCRC/26.03.001/201 2011 under the Securitisation and Reconstruction
0-2011 of Financial Assets and Enforcement of
Security Interest Act 2002
17 DNBS(PD)CC.No.34/ December Submission of online Quarterly Statements
SCRC/26.03.001/201 31, 2013 by Securitisation Companies/
3-14 Reconstruction Companies registered with
the Reserve Bank of India under Section
3(4) of the SARFAESI Act
18 DNBS(PD)CC.No.35/ January Conversion of debt into shares, consent
SCRC/26.03.001/201 23, 2014 level of security enforcement actions and
3-14 permission to acquire debt from other
SC/RCs
19 DNBS(PD)CC.No.36/ March 19, Restructuring Support Finance -
SCRC/26.03.001/201 2014 participation by investors
3-14
71Sr. Circular No. Date Subject
No.
20 DNBS(PD)CC.No.37/ March 19, Buyback of assets from SC/RCs by the
SCRC/26.03.001/201 2014 Defaulters and acquisition of assets by
3-14 SC/RCs from sponsor banks
21 DNBS(PD)CC.No.38/ April 23, Uniform Accounting Standards at ARCs
SCRC/26.03.001/201 2014
3-14
22 DNBS(PD)CC.No.41/ August 05, Regulatory framework for SCs/RCs –
SCRC/26.03.001/201 2014 Certain amendments
4-15
23 DNBS(PD)CC.No.42/ August 07, Certain amendments in Regulatory
SCRC/26.03.001/201 2014 framework for SCs/RCs – Clarifications
4-15
24 DNBR(PD)CC.No.01/ February Bank’s prior approval for change in
SCRC/26.03.001/201 24, 2015 shareholding
4-15
25 DNBR(PD)CC.No.02/ May 07, Resolution period for BIFR/CDR/JLF cases
SCRC/26.03.001/201 2015
4-15
26 DNBR. PD (ARC) CC. April 28, Securitisation and Reconstruction of
No. 2017 Financial Assets and Enforcement of
03/26.03.001/2016-17 Security Interest Act, 2002- Section 3 (1) (b)
- Requirement of Net Owned Fund (NOF)
for Asset Reconstruction Companies.
27 DNBR.PD(ARC)CC. November Conversion of debt into equity- Review
No.04/26.03.001/2017 23, 2017
-18
28 DNBR.PD(ARC)CC.N January Submission of Financial Information to
o.05/26.03.001/2017- 04, 2018 Information Utilities
18
29 DNBR. PD (ARC) CC. October Master Direction - Fit and Proper Criteria for
No. 25, 2018 Sponsors - Asset Reconstruction
06/26.03.001/2018-19 Companies (Reserve Bank) Directions,
2018
30 DNBR.PD (ARC) June 28, Permission to acquire financial asset from
CC.No.07/26.03.001/2 2019 other Asset Reconstruction Companies
018-19 (ARCs)
72Sr. Circular No. Date Subject
No.
31 DOR.NBFC(ARC) December Acquisition of financial assets by Asset
CC. No. 6, 2019 Reconstruction Companies from sponsors
8/26.03.001/2019-20 and lenders
32 DOR.NBFC(ARC) July 16, Fair Practices Code for Asset
CC. No. 2020 Reconstruction Companies
9/26.03.001/2020-21
33 DoR.SIG.FIN.REC.75/ October Review of Regulatory Framework for Asset
26.03.001/2022-23 11, 2022 Reconstruction Companies (ARCs)
34 DOR.ACC.REC.No.10 February Implementation of Indian Accounting
4/21.07.001/2022-23 20, 2023 Standards (Ind AS)
35 DOR.GOV.REC.79/18 February Appointment/re-appointment of Director,
.10.006/2023-24 27, 2024 Managing Director or Chief Executive
Officer in Asset Reconstruction Companies
36 DoR.FIN.REC.No.46/ October Submission of information to Credit
26.03.001/2024-25 10, 2024 Information Companies (CICs) by ARCs
37 DoR.SIG.FIN.REC. January Guidelines on Settlement of Dues of
56/26.03.001/2024-25 20, 2025 borrowers by ARCs
73