RBI grants a license to NARCL under Sarfaesi Act

The Reserve Bank of India (RBI) on October 4 gave license to the ₹6,000 crore National Asset Reconstruction Company Ltd. (NARCL), a move that will help kickstart operations of the bad bank. The Reserve Bank of India (RBI) has approved the license of the National Asset Reconstruction Company Limited (NARCL) under section 3 of the SARFAESI Act 2002. The approval has been received from the Department of Regulation of the RBI.

As per Section 3 of the SARFAESI Act, a company can carry the business of asset reconstruction only after

• obtaining a certificate of registration from RBI and,
• having the owned fund of not less than Rs 2 crore or such other amount not exceeding 15% of total financial assets acquired or to be acquired by the securitisation company or reconstruction company.

The NARCL has been incorporated under the Companies Act, and public sector banks will hold 51 percent in NARCL.