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Home / NBFC & Fintech / Asset Reconstruction Company (ARC) Registration
Last updated: 2 October 2026
An asset reconstruction company cannot commence business without a Certificate of Registration from the Reserve Bank of India under Section 3 of the SARFAESI Act, 2002. Expertvuw supports sponsors with structuring, fit and proper documentation, application preparation and coordination through the RBI review.
Asset reconstruction companies acquire financial assets, largely stressed loans, from banks and financial institutions and work to resolve them. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) requires every ARC to be registered with the Reserve Bank under Section 3 and to hold the net owned fund RBI specifies.
The current rules are consolidated in the Reserve Bank of India (Asset Reconstruction Companies) Directions, 2025, issued on 28 November 2025. They set a minimum Net Owned Fund of ₹300 crore, a capital adequacy ratio of 15% of risk-weighted assets, an independent director as Chair of the Board, and a requirement to commence business within six months of receiving the certificate.
Section 3(3) of the Act lets RBI consider, among other things, the professional experience of directors in finance, securitisation and reconstruction, and whether each sponsor is fit and proper. A sponsor is any person holding 10% or more of the ARC’s paid-up equity capital, so shareholder due diligence is a central part of the application.
Expertvuw’s role is advisory, documentation and coordination. Certifications and legal opinions are obtained through independent licensed professionals.
Based on the regulations and circulars referred to on this page. Last updated: 28 September 2026.
Certificate of Registration from RBI under Section 3 of the SARFAESI Act, 2002.
₹300 crore Net Owned Fund to commence business (ARC Directions, 2025).
Any person holding at least 10% of paid-up equity capital (SARFAESI Act, Section 2 definition).
Minimum 15% of total risk-weighted assets (ARC Directions, 2025).
Business must commence within six months from the date of grant of CoR (ARC Directions, 2025).
Only securitisation and asset reconstruction functions under Section 10 of the SARFAESI Act (ARC Directions, para 17).
ARC applications are reviewed closely because of the capital involved and the sponsors’ role in the system.
Gaps in integrity, track record or compliance history of any 10% shareholder can stall the whole application.
Directors must show adequate experience in finance, securitisation and reconstruction, with an independent director as Chair.
The ₹300 crore NOF must be in place and traceable to documented sources before business can commence.
Related services.
Board-approved policies such as KYC and outsourcing mapped to RBI directions.
Registration and filings with the Central Registry for security interests.
Advisory on corporate insolvency processes under the Insolvency and Bankruptcy Code.
Buyer-side diligence on regulated financial entities and their promoters.
Assess sponsor eligibility, capital sources and the proposed acquisition and resolution model.
Incorporate or restructure the company and plan infusion of the ₹300 crore NOF.
Constitute the board with an independent Chair and form the audit committee of non-executive directors.
File the CoR application with annexures with RBI's Department of Regulation or through PRAVAAH.
Respond to RBI queries on sponsors, directors, business plan and capital.
On grant of CoR, commence business within six months and operationalise compliance.
A registered ARC stays under continuing RBI regulation on capital, governance and investment in security receipts.
Invest at least 15% of transferors' investment or 2.5% of total SRs issued, whichever is higher.
Obtain prior RBI approval for a new sponsor, a sponsor's exit or specified share transfers.
Collect directors' fit and proper declarations annually as on 31 March.
Audit committee of non-executive directors, chaired by an independent director, meets at least once a quarter.
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₹300 crore, under the Reserve Bank of India (Asset Reconstruction Companies) Directions, 2025.
Under the SARFAESI Act, a sponsor is any person holding not less than 10% of the paid-up equity capital of an ARC. Each sponsor must be fit and proper under RBI’s criteria.
Within six months from the date of grant of the Certificate of Registration.
No. An ARC may undertake only securitisation and asset reconstruction activities and the functions listed in Section 10 of the SARFAESI Act, subject to limited exceptions in the ARC Directions, 2025.
Yes, prior approval is required for transfers or fresh issues that bring in a new sponsor, remove an existing sponsor, or cross the thresholds specified in the ARC Directions, 2025.
ACS – Director, Expertvuw Management Pvt Ltd
Advisory and company secretarial work is handled by Expertvuw’s team. Audits, certifications and representation that the law reserves for Chartered Accountants, advocates or other licensed professionals are provided by independent professionals engaged for your case.