The RBI Directions, 2025, had allowed an ARC to act as an RA for IBC resolutions if it had a minimum NOF of ₹1,000 crore and did not retain significant influence or control over the corporate debtor beyond five years. Separately, the minimum NOF requirement for an ARC was ₹300 crore. With only five of 27 ARCs meeting the ₹1,000 crore threshold, those between ₹300 crore and ₹1,000 crore could not act as RAs.
The clarification is, therefore, significant for ARCs and the distressed-assets market. It recognises the ability of ARCs to invest in distressed assets. It brings a specialised distressed-debt investor in the resolution process and allows an ARC to participate alongside an applicant undertaking the non-Sarfaesi…