**Executive Summary**
This document contains the Reserve Bank of India's (RBI) Amendment Directions, 2026, to the Master Direction on Asset Reconstruction Companies (ARCs) issued in 2025. The amendment clarifies the components used in calculating Owned Funds by specifying the conditions for including quarterly profits. These directions are effective immediately.
**Key Points / Main Content**
* **Amendment Title and Issuance:**
* The document is titled "Reserve Bank of India (Asset Reconstruction Companies) Amendment Directions, 2026."
* Issued by the RBI under Sections 3, 9, 10, 12, and 12A of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
* **Effective Date:**
* The Amendment Directions are effective immediately.
* **Modification to Master Direction:**
* Paragraph 11(i)(c) of the Master Direction is modified.
* **Inclusion of Quarterly Profits:**
* Free reserves (excluding revaluation reserve) can include quarterly profits, subject to the following conditions:
* Financial statements must be subjected to limited review on a quarterly basis by statutory auditors.
* Such profits shall be reduced by average dividend paid in the last three years, and the amount which can be reckoned for inclusion would be arrived at as under:
* EPt = NPt - 0.25 * D * t
*Where:
*EPt = Eligible profit up to quarter ‘t’ of the current financial year, t varies from 1 to 4
*NPt = Net profit up to quarter ‘t’
*D = average dividend paid during the last three years
* Losses in the current year shall be fully deducted from Owned Fund.
**Impact Analysis**
**Asset Reconstruction Companies (ARCs)**
* **Impact:** ARCs are directly impacted by the new guidelines for calculating Owned Funds. The inclusion of quarterly profits with specific conditions affects their capital adequacy and operational flexibility.
* **Action Required:** ARCs must immediately implement the changes to their financial reporting processes, ensuring that the inclusion of quarterly profits adheres to the specified conditions and is reviewed by statutory auditors on a quarterly basis. They must also adjust their Owned Fund calculations accordingly.
Key Entities Referenced
Reserve Bank of India (Asset Reconstruction Companies) Amendment Directions, 2026: The primary subject of the document, specifying amendments to existing directions.
Reserve Bank of India (Asset Reconstruction Companies) Directions, 2025: The 'Master Direction' being amended by the current document.
Reserve Bank of India: Regulatory body issuing the directions.
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002: Act providing the Reserve Bank of India the powers to issue these directions
Asset Reconstruction Companies (ARCs): Entities to which the directions apply.
भारतीय ररजर्व बैंक
_________________________RESERVE BANK OF INDIA ______________________
www.rbi.org.in
RBI/2025-26/___
DOR.CAP.REC.No.XX/21.01.002/2025-26 January 13, 2026
All Asset Reconstruction Companies (ARCs)
Dear Sir / Madam,
Reserve Bank of India (Asset Reconstruction Companies) Amendment
Directions, 2026 – Draft for Comments
The Reserve Bank had issued the Reserve Bank of India (Asset Reconstruction
Companies) Directions, 2025 (hereafter referred as the ‘Master Direction’) on
November 28, 2025, as amended from time to time. There is a need to further
amend the same to provide clarification on the components being reckoned in the
computation of Owned Fund.
2. Accordingly, in exercise of the powers conferred under 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), and of all the powers enabling it in this
behalf, the Reserve Bank being satisfied that it is necessary and expedient in the
public interest so to do, and in order to ensure prudent and efficient functioning of
Asset Reconstruction Companies, hereby, issues the following Amendment
Directions.
3. These Directions shall be called Reserve Bank of India (Asset Reconstruction
Companies) Amendment Directions, 2026.
4. These Amendment Directions shall come into force with immediate effect.
5. These Amendment Directions modify the Master Direction as under:
Paragraph 11(i)(c) shall be replaced by:
“(c) free reserves (excluding revaluation reserve) including quarterly profits.
Inclusion of quarterly profits shall be subject to the following conditions:(i) The financial statements shall be subjected to limited review on a
quarterly basis by the statutory auditors.
(ii) Such profits shall be reduced by average dividend paid in the last three
years and the amount which can be reckoned for inclusion would be
arrived at as under:
EP = NP - 0.25 *D*t
t t
Where:
EP = Eligible profit up to quarter ‘t’ of the current financial year, t varies
t
from 1 to 4
NP = Net profit up to quarter ‘t’
t
D = average dividend paid during the last three years
Losses in the current year shall be fully deducted from Owned Fund;”
Yours faithfully,
Sunil T S Nair
Chief General Manager
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