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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

Acquisition of financial assets by Asset Reconstruction Companies from sponsors and lenders

06-Dec-2019 | RBI/2019-2020/110 DOR.NBFC(ARC) CC. No. 8/26.03.001/2019-20

It has been notified that Asset Reconstruction Companies (ARCs) shall not acquire financial assets from the following on a bilateral basis, whatever may be the consideration: (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 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 market forces.

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