Economics • Banking & FinanceEasy
What is the objective of setting up 'Asset Reconstruction Companies (ARCs)' under the SARFAESI Act in India?
A. To acquire non-performing assets (NPAs) from banks and financial institutions and manage their resolution and recovery.✓ Correct Answer
B. To construct public infrastructure assets using foreign direct investment.
C. To restructure equity capital of public sector undertakings during privatization.
D. To provide venture capital funding to micro-enterprises in rural areas.
💡 Solution & Explanation
Asset Reconstruction Companies are specialized financial institutions established under the SARFAESI Act to purchase non-performing assets from banks, thereby helping clean up balance sheets and facilitating debt recovery. Unlike venture capital or infrastructure funds, their mandate focuses strictly on distressed asset management and resolution. The functioning of ARCs under banking regulations is a staple topic in economic current affairs.
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