What changed
RBI issued a master circular consolidating all existing instructions for ARCs as of January 31, 2022. This replaces earlier circulars and guidance notes, bringing together requirements on registration, capital adequacy, asset classification, and reporting. The circular also clarifies applicability of Ind AS for ARCs covered under Rule 4 of the Companies (Indian Accounting Standards) Rules, 2015.
What it means for you
ARCs now have a single reference document for all regulatory requirements, reducing ambiguity. The consolidation ensures uniform compliance and easier supervision. ARCs must align their practices with the updated definitions and reporting norms, including quarterly submissions and data sharing with credit information companies.
What you must do
- Review and update internal policies to align with the consolidated master circular.
- Ensure compliance with Ind AS if your ARC is covered under Rule 4 of the Companies (Indian Accounting Standards) Rules, 2015.
- Submit quarterly statements and audited balance sheets as per the circular's requirements.
- File transaction details with the Central Registry and share data with credit information companies and information utilities.
- Obtain RBI prior approval for any substantial change in management through share transfer.
Who it affects
All Asset Reconstruction Companies registered with RBI, Trusts managed by ARCs (partially exempt from certain provisions), Sponsors and investors in ARCs
Does this master circular apply to trusts managed by ARCs?
Yes, but trusts are exempt from paragraphs on registration, net owned fund, permissible business, capital adequacy, deployment of funds, asset classification, investments, income recognition, and disclosures.
What is the effective date of this master circular?
The circular consolidates instructions as of January 31, 2022, and was issued on February 10, 2022. ARCs should comply from the date of issuance.
Are ARCs required to follow Ind AS?
Only ARCs covered by Rule 4 of the Companies (Indian Accounting Standards) Rules, 2015 must comply with Ind AS for financial statements from FY 2019-20 onwards, as per RBI's March 13, 2020 circular.