RBI Hosts Conference For Top Asset Reconstruction Companies

The Reserve Bank on Friday held a conference for directors and senior officials of asset reconstruction companies (ARCs) as part of the series of supervisory engagements it has been organising over the last one year with its regulated entities.

Deputy governors M Rajeshwar Rao and Swaminathan J addressed the participants. Executive Directors S C Murmu, Saurav Sinha, J K Dash, and Rohit Jain, along with other senior officials representing the regulation and supervision departments of the Reserve Bank, also participated in the conference.

Deputy Governor Rao, in his keynote address, highlighted that sound governance provides a strong foundation for ARCs to build a robust business model.

He said the onus in this regard lies largely with the Boards of the ARCs and the top functionaries, who will have to develop a strong and institutional culture based on these principles.

Rao also stressed 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 Reserve Bank.

Swaminathan emphasised that setting the right tone from the top is crucial in fostering a culture of integrity and ethical conduct.

He highlighted several supervisory concerns in the functioning of ARCs.

He urged the ARCs to adopt a regulation-plus approach, where there is compliance with both the letter of the regulation and also its spirit.

Deputy Governor Swaminathan also said boards should accord due importance to assurance functions, namely, risk management, compliance and internal audit. These functions play a critical role in identifying and mitigating risks, ensuring compliance with laws and regulations as well as safeguarding the organisation's reputation.

The conference was attended by over 80 participants representing all 27 ARCs.