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RBI Rolls Out Revised Guidelines for ARC-Borrower Settlements.

Banking & Finance | Dated: 23 Jan 2025

On January 20, 2025, the Reserve Bank of India (RBI) introduced revised guidelines for the settlement of dues payable by borrowers to Asset Reconstruction Companies (ARCs) under the Master Direction- Reserve Bank of India (Asset Reconstruction Companies) Directions, 2024. These guidelines came into force with immediate effect.

🎯 Key Highlights:

  • - These revised guidelines were issued through a circular in exercise of powers given by Sections 9 and 12 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security (SARFAESI) Act, 2002 (54 of 2002).
  • - These revised norms aimed to enhance transparency, accountability, and efficiency in settlement processes carried out by ARCs.

💡 Other Important Facts:

  • (i) In this case, settlement of dues will be done only after the proposal is thoroughly examined by an Independent Advisory Committee (IAC), which shall comprise professionals with expertise in finance, law, or technical fields.
  • (ii) In this case, settlements can be approved by an official who was not part of the acquisition (as an individual or part of a committee).

📚 Test Your Knowledge:

Which of the following entities is responsible for issuing the revised guidelines for ARC-borrower settlements recently ?

Correct Answer: RBI

🚀 Quick Recap:

About RBI

  • Governor : Sanjay Malhotra
  • Headquarter : Mumbai