SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS ORDINANCE, 2002. Objective : to create a new class of legal entities (ASRC) whose main business would be securitisation and asset reconstruction. This means taking over non performing assets of other institutions
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to create a new class of legal entities (ASRC) whose main business would be securitisation and asset reconstruction.
This means taking over non performing assets of other institutions
using their specialized skills to recover the loan / manage such assets.
Registration requirements (S3)
An existing company shall apply for registration with RBI within six months of the commencement of this ordinance.
Qualification for registration(S 3)
(It seems for companies having own funds of more than Rs. two crores, the capital adequacy norm would not apply. This will create an anomaly)
(The provision is very general and companies may use various ways of not reporting losses)
(It is not clear how an assessment for this ability would be made)
(Substantial change in management has not been defined and has been left to the discretion of RBI)
Acquisition of assets: ( S 5, 6 )
Means of financing the acquisition (S 7):
It is not clear whether the decision is binding on ASRC or the obligor
Activities of assets reconstruction companies (S 9):
Other functions of securitisation or reconstruction company (S 10):
ASRC can not carry on any other business.