What is the genesis of ARCs in India?
A. The genesis of ARCs in India can be traced back to constitution of Narasimhan committee by Government of India (GoI)as far back as 1997. The Committee highlighted the need to reduce the high level of NPLs as a critical component of the continuing reform process. Unlike other countries where ARCs were set up after the financial crises for bailing out the banking system, in India the GoI proactively initiated certain measures to control NPLs and expedite the recovery process. Firstly, nthe Recovery of Debts due to Banks and Financial Institutions Act, 1993 was enacted, providing for setting up of the Debt Recovery tribunals (DRTs) and Debt Recovery Appellate Tribunals (DARTs) exclusively to consider the recovery proceedings filed by banks and Financial Institutions (FIs). As a corollary, the Securatisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. 2002 (the Securitisation Act, 2002) was enacted by the GoI.
