Mumbai (Maharashtra) [India], The Reserve Bank of India has expressed concern over the functioning of the Asset Reconstruction Companies (ARCs), as the ARCs are not functioning as per their mandate for reconstruction and recovery of assets. RBI Deputy Governor Swaminathan Janakiraman says ARCs are becoming the warehouse of stressed assets, while the original lenders continue to handle the collection and custody of the security provided by the borrowers. Speaking at the Asset Reconstruction Companies (ARCs) conference in Mumbai, the Deputy Governor said, "The borrowers are responsible for the collection as well as protection of the security provided by them." He also urged the ARCs to re-evaluate their operations. done, especially when managing the assets of stressed companies." , suggesting that acting as warehousing agencies for a fee is not consistent with the intended framework "ARCs may wish to introspect whether they would want them to be warehousing agencies for a fee, which is certainly the underlying intention of the framework. Is not in accordance with.The Deputy Governor said, Asset Reconstruction Company (ARC) is a financial institution that purchases non-performing assets (NPAs) or bad loans from banks and financial institutions, thereby helping the banks clean up their balance sheets and improve liquidity in the system. Get help. Finance Minister, Union Budget 2021 announced the formation of an AR structure, which will consist of two entities. National Asset Reconstruction Company Limited (NARCL), and India Debt Resolution Company Limited (IDRCL) for the consolidation and resolution of non-performing assets (NPAs) in the banking industry. The Deputy Governor also highlighted that the data shows that One-time settlement and rescheduling of loans are the principal measures of debt by ASE Reconstruction Companies (ARCs), "A review of the data indicates that one-time settlement and rescheduling of loans are the principal reconstruction measures employed by ARCs" He said these measures are not unique to ARCs For. Lenders such as banks and financial institutions have the ability and authority to implement similar strategies directly. By doing so, lenders can potentially manage to recover their non-performing assets (NPAs) without the need to offload them on ARCs. Lump sum settlement generally involves negotiating a lump sum payment at a discount from the borrower to settle the outstanding amount.loan. On the other hand, loan restructuring involves changing the terms of existing loan agreements, such as extending the repayment period or reducing the interest rate, to make it easier for the borrower to meet his obligations. NARCL is a government entity, incorporated I went. 7 July 2021, Public sector banks hold the major stake and private banks hold the balance and Canar Bank is the sponsor bank. NARCL is registered with the Reserve Bank of India as an Asset Reconstruction Company under the Securitization and Reconstruction of Financial Assets and Security Interest Enforcement Act, 2002.Rs 500 crore and above in the Indian banking system