The committee also recommended that if 66% of the lenders on value basis decide to accept the proposal made by an asset reconstruction company (ARC), it should be binding on the remaining lenders and should be done within 60 days of approval. should be implemented.
The committee was set up by the RBI in April to examine the role of arcs in stressed debt resolution and to review their business model.
“As a measure to incentivize lenders to sell their financial assets to ARCs at the initial stage of the stress, the committee will recommend a waiver to the lenders to amortize the loss, if any, on the sale over a period of two years. recommends,” the report said.
It also said that in order to streamline the process of selling stressed assets to ARC for all accounts in excess of Rs 1 billion ($13.4 million), as part of the lender’s resolution plan, ARC will need to issue such accounts. The sale or auction must be clearly appraised. the option.
The report recommends that all lenders, including banks, make a list of non-performing assets that they intend to sell to eligible entities, including ARCs, at the beginning of each year after entering into confidentiality agreements with them.
“Providing additional funding to stressed borrowers is a key requirement for reviving their businesses,” the report said.
As ARCs are being envisaged as the prime vehicle for resolution of stressed assets, the committee has also recommended that the minimum net owned fund requirement for ARCs be doubled to Rs 2 billion.
“The existing ARC may be provided with a good route to meet this requirement,” the report said.
The report is open for comments from stakeholders and the central bank will publish the final guidelines after considering all the comments received.