Close to 12 companies applied to the RBI for licenses to start an asset reconstruction company in India following the passing of the Bankruptcy Bill (2016) in the Lok Sabha. Applicants ranged from foreign distressed asset specialists to domestic investors with access to considerable funds.
Stressed assets (which include gross bad loans, restructured assets and written-off accounts) for the banking system rose to 14.5%, as of 31 December 2015, compared to 9.8% in March 2012, according to data from RBI.
ARCs play an important role in reconstruction of such stressed assets, RBI said in 2014 when it released a new framework to revitalize the distressed assets.
Applicants who’ve applied include JC Flowers & Co., in partnership with Ambit Holdings Pvt. Ltd., domestic financial services firm IIFL Holdings Ltd. and Sudhir Valia, former CFO of Sun Pharmaceuticals.