RBI urges ARCs to follow the regulations in letter & spirit
Reserve Bank of India has urged asset reconstruction companies (ARCs) to follow the regulations in letter and spirit, and directed them to conduct the recovery process responsibly by following transparent and non-discriminatory practices.
This was conveyed by senior RBI officials at a closed-door conference the banking regulator held with top management of 27 registered ARCs.
RBI deputy governors M Rajeshwar Rao and Swaminathan J gave keynote addresses in the conference, 'Governance in ARCs — Towards Effective Resolutions'. It was attended by senior-most RBI officials and 80 participants from the ARC sector.
Swaminathan highlighted several supervisory concerns in the functioning of ARCs while Rao stressed on the need for responsible conduct in the recovery process and emphasised that ARCs should follow transparent and non-discriminatory practices in line with the comprehensive fair practice code (FPC) put in place by the RBI, the regulator said in a statement.
ET had reported on May 11 that RBI will meet top ARC officials to discuss governance issues.
Addressing the ARCs, Swaminathan emphasised that setting the right tone from the top is crucial in fostering a culture of integrity and ethical conduct. He urged the ARCs to adopt a regulation-plus approach where there is compliance with both the letter of the regulation and spirit.
He said the boards should accord due importance to assurance functions such as risk management, compliance, and internal audit. These functions play a critical role in identifying
