Economics • Banking & FinanceMedium
Under the Reserve Bank of India guidelines, what is the primary purpose of setting up 'Asset Reconstruction Companies (ARCs)'?
A. To provide long-term capital loans to distressed infrastructure projects
B. To acquire non-performing assets (NPAs) from banks and financial institutions to facilitate their resolution and recovery✓ Correct Answer
C. To manage foreign exchange reserves and stabilize the rupee-dollar exchange rate
D. To act as the central clearing house for all retail electronic payment transactions in India
💡 Solution & Explanation
Asset Reconstruction Companies are specialized financial institutions registered under the SARFAESI Act to purchase non-performing loans from banks, enabling cleaner balance sheets and targeted debt recovery. They operate separately from retail payment clearing houses or central foreign exchange management desks.
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