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The Reserve Bank of India (RBI) has proposed to constitute a Committee to undertake a comprehensive review of the working of Asset Reconstruction Companies (ARCs) in the financial sector ecosystem.

The committee would recommend suitable measures for enabling ARCs to meet the growing requirements of the financial sector as cases of non performing assets (NPAs) rise and there is a need to reconstruct such assets. Already a new bad bank has been proposed in this year's Budget towards this goal.

RBI in its statement on developmental and regulatory policies said that while ARCs have grown in number and size, their potential for resolving stressed assets is yet to be realised fully. The need for a committee has been felt in this regard, it added.

After enactment of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act in 2002, regulatory guidelines for Asset Reconstruction Companies (ARCs) were issued in 2003 to enable development of this sector and to facilitate smooth functioning of ARCs.

Details of the constitution of the committee and its terms of reference will be announced separately.