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Sudarshan Sen Committee of RBI

Sudarshan Sen Committee of RBI

Recently the Reserve Bank of India (RBI) has constituted a committee to review the regulation of asset reconstruction companies (ARC).

This committee will evaluate the role of Asset Reconstruction Company in addressing stressed debt, and review their business model.

The 6-member committee will be headed by Sudarshan Sen, former executive director of the Reserve Bank of India.

Need for the Committee

  • It may be noted that in the year 2002, the SARFAESI Act i.e. ‘Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002’ was enacted.
  • Under this, regulatory guidelines for asset reconstruction companies (ARC) were issued in the year 2003. Since then the role of asset reconstruction companies has become important, but as of now, these companies have not been fully successful in addressing the problem of stressed assets.
  • It may be noted that RBI, under the decisions of the Monetary Policy Committee, announced that it would review the actions of asset reconstruction companies in the country.

Functions of the committee

  • This committee will review the law and regulatory framework applicable to asset reconstruction companies. The committee will submit its report to the Reserve Bank within 3 months from its first meeting.
  • At the same time, the committee will advise on increasing the capacity of asset reconstruction companies and also review their role in the resolution of stressed loans under the Insolvency and Bankruptcy Code,
  • This committee will review the business model of asset reconstruction companies and suggest improvements in liquidity and business of securities receivables.
  • It will also provide appropriate measures to enable asset reconstruction companies to meet the growing requirements of the financial sector.

Source – The Hindu

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