Module: | Enforcement and Appeals
Q10: Asset Reconstruction Companies (ARCs) play a vital role in the ecosystem of bad loan management. Which of the following statements correctly describe their regulatory status and functions?
1. ARCs must be registered with and are regulated by the Reserve Bank of India (RBI).
2. For the purpose of raising funds to acquire financial assets, ARCs can issue "Security Receipts" to qualified buyers.
2. For the purpose of raising funds to acquire financial assets, ARCs can issue "Security Receipts" to qualified buyers.
✅ Correct Answer: C
Section 3 of the SARFAESI Act requires ARCs to register with the RBI.
Furthermore, under Section 7, ARCs can raise funds by issuing Security Receipts (SRs) to Qualified Buyers (QIBs), which represent an undivided right or interest in the financial asset being acquired.
Furthermore, under Section 7, ARCs can raise funds by issuing Security Receipts (SRs) to Qualified Buyers (QIBs), which represent an undivided right or interest in the financial asset being acquired.