Abstract

On February 29, 2016, the Government of India (GoI) announced easing of investment norms for Asset Reconstruction Companies (ARCs) in India. The ARCs in India had been suffering from a lack of financial and human resources necessary to do business effectively. The GoI initiative received a positive response from industrial circles and was expected to attract foreign investment to the sector in a big way. The case study focuses on the origin of ARCs, their functioning, and the challenges they face in India.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Reasons for ARCs being allowed in India
• Business model of ARCs in India
• Opportunities and challenges facing ARCs in India
• Legal challenges for banks and ARCs in India in recovering, restructuring, and winding up defaulting companies

Keywords

Asset Reconstruction Companies in India – Challenges and Opportunities (SMCS), Micro Finance Institutions (MFI),Self-Help Groups (SHGs),Center for Youth and Social Development (CYSD),Poverty alleviation, SHG–Bank Linkage Program (SBLP), Micro finance sector, Capacity building support