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Asset Reconstruction Company (ARC) Registration
NBFC & Fintech · Asset Reconstruction Company

Asset Reconstruction Company (ARC) Registration under SARFAESI Act

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.

Overview

What ARC registration involves

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.

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What This Service Covers

What our ARC registration support covers

1

Sponsor and shareholding structuring against the ₹300 crore NOF requirement

2

Fit and proper documentation for sponsors, directors and the MD or CEO

3

Board and committee design with an independent Chair and audit committee

4

Business plan covering acquisition strategy, resolution approach and capital

5

Preparation and filing of the CoR application and responses to RBI queries

Key facts at a glance

Registration law

Certificate of Registration from RBI under Section 3 of the SARFAESI Act, 2002.

Minimum NOF

₹300 crore Net Owned Fund to commence business (ARC Directions, 2025).

Sponsor

Any person holding at least 10% of paid-up equity capital (SARFAESI Act, Section 2 definition).

Capital adequacy

Minimum 15% of total risk-weighted assets (ARC Directions, 2025).

Commencement

Business must commence within six months from the date of grant of CoR (ARC Directions, 2025).

Permitted activity

Only securitisation and asset reconstruction functions under Section 10 of the SARFAESI Act (ARC Directions, para 17).

What's Covered

Common issues in ARC applications

ARC applications are reviewed closely because of the capital involved and the sponsors’ role in the system.

Sponsor due diligence

Gaps in integrity, track record or compliance history of any 10% shareholder can stall the whole application.

Board composition

Directors must show adequate experience in finance, securitisation and reconstruction, with an independent director as Chair.

Capital readiness

The ₹300 crore NOF must be in place and traceable to documented sources before business can commence.

Documents & Process

Related services

Related services.

NBFC Policy Pack

Board-approved policies such as KYC and outsourcing mapped to RBI directions.

CERSAI Registration

Registration and filings with the Central Registry for security interests.

Insolvency (IBC) Advisory

Advisory on corporate insolvency processes under the Insolvency and Bankruptcy Code.

NBFC Due Diligence

Buyer-side diligence on regulated financial entities and their promoters.

Documents Required

Documents we need from you

Company documents

Sponsor and director documents

Our Process

ARC registration process

1

Feasibility

Assess sponsor eligibility, capital sources and the proposed acquisition and resolution model.

2

Incorporation and capital

Incorporate or restructure the company and plan infusion of the ₹300 crore NOF.

3

Governance set-up

Constitute the board with an independent Chair and form the audit committee of non-executive directors.

4

Application filing

File the CoR application with annexures with RBI's Department of Regulation or through PRAVAAH.

5

RBI review

Respond to RBI queries on sponsors, directors, business plan and capital.

6

Commencement

On grant of CoR, commence business within six months and operationalise compliance.

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After Registration

Ongoing obligations for a registered ARC

A registered ARC stays under continuing RBI regulation on capital, governance and investment in security receipts.

Security receipts

Invest at least 15% of transferors' investment or 2.5% of total SRs issued, whichever is higher.

Change in sponsor

Obtain prior RBI approval for a new sponsor, a sponsor's exit or specified share transfers.

Fit and proper updates

Collect directors' fit and proper declarations annually as on 31 March.

Audit committee

Audit committee of non-executive directors, chaired by an independent director, meets at least once a quarter.

Get in Touch

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    FAQs

    Frequently Asked Questions

    What is the minimum Net Owned Fund for an ARC?

    ₹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.

    About Expertvuw

    Who handles your case

    CS Chetna Shoor, Company Secretary and Director, Expertvuw

    CS Chetna Shoor

    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.

    Expertvuw Management Pvt Ltd