Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: list of goods taxed at 4% :: VAT Audit :: TDS :: articles on VAT and GST in India :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARDS :: empanelment :: form 3cd :: due date for vat payment :: cpt :: ACCOUNTING STANDARD :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT RATES :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4%
 
 
News Headlines »
 Delhi: 54 CAs, company secretaries on radar in I-T crackdown against black money
 10 most important income-tax changes which will apply from April 1
 10 Income Tax Rules That Will Change From April. See Details Herea
 Looking for last-minute tax planning with Section 80C investments? Here's help
 Aadhaar mandatory for filing income tax return
 Will Aadhaar linkage solve India's income tax woes?
 GST roll out from July 1 will make goods cheaper: Jaitley
 Aadhaar To Be Mandatory For Filing Income Tax Return, PAN Application
 7 best tax-saving solutions which can help you save money
  No proposal to replace Income Tax with Banking Cash Transaction Tax
 How to Make Tax Saving Investments Less Taxing with an SIP in ELSS

Asset recast cos may find it easier to convert bad loans into equity
March, 27th 2007

The business of buying non-performing assets from banks and turning them around is likely to become hassle-free for asset reconstruction companies (ARCs). The government is planning to remove the legal hurdles these companies face while trying to convert bad loans into equity.

The company affairs ministry has sought comments from all stakeholders on three proposals it is working on in consultation with the finance ministry. One of the proposals is to specify RBI-approved ARCs under a company law provision relating to further issue of capital.

Section 81(3) says the borrower company is exempted from the requirement of passing a special resolution in a general meeting or securing governments approval for share allotment if a lender wants to subscribe to the capital as part of an option attached to the loan.

Since ARCs acquire bad loans under the Sarfaesi Act, they cannot meet the requirement of the special resolution or government approval. The proposed amendment would remove this technical hurdle.

The other proposal is to exempt ARCs from Sebis takeover regulations. Currently, any conversion of debt into equity in excess of the stipulated threshold cannot be done without making an open offer to acquire the shares.

This applies to acquiring 15% of the voting rights or consolidation beyond 5% where the acquirer already has 55-75% stake.

Another proposal is to exempt ARCs from the Sebi disclosure and investor protection guidelines which deal with the pricing of the equity shares to be issued to the ARC as part of a resolution scheme.

Although ARCs are incorporated as companies, they mostly come under the jurisdiction of the ministry of finance.

While bankers say the net NPAs of banks is just 2% of their portfolio, some experts dispute the figure, saying it could be much higher. Easing the restrictions on ARCs to convert loans into equity is expected to make the non-performing loan market more dynamic.

Besides Asset Reconstruction Company of India (Arcil), banks such as Standard Chartered and Kotak are also getting into acquisition of NPAs. Some banks and FIs have also secured licences to invest in ARCs under RBI guidelines.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Privacy Policy

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions