MUMBAI, May 31: Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao has expressed concerns over “tainted” promoters misusing the asset reconstruction companies (ARC) route to enter the bankruptcy proceedings and stressed for improving governance practices such firms.
The credit life cycle involves four distinct stages — sourcing of credit proposal; appraisal and underwriting; disbursal and monitoring; and, repayment, which then starts off the next iteration of the credit cycle.
“If, however, for some reason, the borrower does not pay the dues on time and a loan does not enter the fourth stage, there could be a problem. ARCs have been institutionalised to play a crucial role at this juncture,” Rao said. (PTI)
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