Economics • Banking & FinanceMedium
In the context of the Indian banking sector, what is the primary role of the 'Asset Reconstruction Company (ARC)'?
A. To finance infrastructure projects and long-term industrial capital investments.
B. To acquire non-performing assets (NPAs) from banks and financial institutions to resolve and recover bad loans efficiently.✓ Correct Answer
C. To regulate foreign institutional investments and monitor capital account convertibility.
D. To issue currency notes and manage the country's foreign exchange reserves.
💡 Solution & Explanation
Asset Reconstruction Companies are specialized financial institutions registered under the SARFAESI Act, 2002, created to acquire non-performing assets from banks to resolve bad loans efficiently. Central banks handle currency issuance, whereas infrastructure financing is managed by separate institutions like NABARD or dedicated funds.
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