(LiveMint)
The Reserve Bank of India will not approve bankruptcy resolution plans submitted by asset reconstruction companies (ARCs), a person aware of the matter said, a move that is likely to jeopardize the recovery of thousands of crores worth of bad loans.
ARCs can instead purchase the debt of the stressed accounts from banks and participate as a creditor under IBC. RBI had recently rejected UV Asset Reconstruction Co. Ltd’s (UVARCL) resolution plan for the bankrupt telecom operator Aircel Group.
“In order to allow ARCs to participate as resolution applicants, several enabling conditions need to be evaluated. There is a need to expedite the mechanism for resolution of corporate insolvency, but it will be wrong to use an inappropriate tool for the purpose,” said the person.