How much funding is required for an Asset Reconstruction Company (ARC) to become a resolution applicant?

The correct answer is ₹1000 crore.

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• An Asset Reconstruction Company (ARC) needs a minimum funding of ₹1000 crore to qualify as a resolution applicant under the Insolvency and Bankruptcy Code (IBC).

Key Points

• ARCs are financial institutions that acquire distressed assets from banks and financial institutions.
• Resolution applicants are entities that propose to resolve insolvency issues under IBC, typically through the formation of a resolution plan.
• Funding of ₹1000 crore is required to ensure the ARC has sufficient financial capacity to resolve large-scale distressed assets.
• ARCs help banks recover bad loans and streamline their balance sheets.

Additional Information

• The IBC provides a structured framework for resolving insolvency, focusing on asset recovery.
• ARCs acquire non-performing assets (NPAs) at a discount and work to maximize recovery.
• Several ARCs have been formed in India, including ARCIL and IndiaREIT.
• The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act is key to the functioning of ARCs in India.