The Reserve Bank of India remains unconvinced that asset reconstruction companies can act as resolution applicants as part of insolvency proceedings. The regulator, according to a person familiar with the matter, believes that several enabling conditions would need to be put in place before allowing ARCs to act as resolution applicants.
The view comes after several rounds of discussions between the regulator, ARCs and other stakeholders, which followed an attempt by UV ARC Ltd. to purchase 74% stake in Aircel Ltd. The deal, if it had gone through, would have made the ARC a promoter of a telecom company with over Rs 12,000 crore in debt.
The RBI first objected to the plan in August 2019. Despite that UV ARC went ahead with the resolution process and was named highest bidder by Aircel’s financial creditors. Later, on insistence from the National Company Law Tribunal, UV ARC again…