The Asset Reconstruction Company, also known asARC, is a securitization company which is formed under the Companies Actof 2013. In compliance with the provisions of Section 3 of the SARFAESI Act, anARC must be registered with the RBI. Asset Reconstruction Companies (ARCs) arespecialist financial firms that purchase bad loans and non-performing assets (NPAs) from banks and financial institutions in order to clean up their balance sheets and increase liquidity.

As the ARC purchases a bank's or financialinstitution's financial assets, it becomes the owner of the asset and assumesthe role of the lender bank or financial institution. Following that, itproceeds with the recovery process as if it were the initial lender, in compliancewith SARFAESI and other relevant statutes.

Assets Reconstruction Company(ies) must make an application for registration withthe Reserve Bank within six months of the Act's commencement. Any corporationcannot conduct asset rehabilitation or securitization business until itreceives a certificate of registration .

TheARC receives funding from

a. In order to meet its funding requirements,the ARC can issue bonds and debentures. However, security receipts are the mostsignificant, and possibly the only, source of funds for the ARCs.

Security Receipts are a receipt or othersecurity provided by a reconstruction company (or, in this case, asecuritization company) to any eligible institutional buyer (QIB) for aspecific scheme, as specified by the SARFAESI Act. The Security Receipt grantsthe holder (QIB) a right, title, or interest in the financial asset acquired by the ARC. These ARC-issued SRs are backed up by impaired properties. 

ARC is ineligible to collect funds fromnon-qualified investors (QB). A manufacturing business, for example, mightconsider investing surplus capital in the ARC. https://www.corpzo.com/asset-reconstruction-company-registration--arc