RBI's New Policy for ARCs

In a significant move to streamline the debt recovery process, the Reserve Bank of India (RBI) has introduced new norms for Asset Reconstruction Companies (ARCs). These norms allow ARCs to settle dues with defaulters after evaluating other recovery options and the realisable value of the borrower's assets.

Simplified Settlement for Smaller Loans

For accounts with a principal outstanding of Rs 1 crore or below, settlements can now be made based on a board-approved policy. This change is expected to expedite the recovery process for smaller loans, making it less cumbersome for ARCs.

Enhanced Recovery for Larger Loans

For larger loans, the decision-making process has been delegated to a board-level panel, eliminating the need for full board approval. This adjustment aims to speed up the settlement process, thereby improving the efficiency of debt recovery.

Special Considerations for Fraudsters and Wilful Defaulters

The new rules also include provisions for dealing with fraudsters and wilful defaulters, ensuring that criminal proceedings remain unaffected. All settlements must adhere to legal requirements, including obtaining court approvals when necessary.