After failure of the India's largest Housing Finance Company in private sector, with the directions of RBI, an Asset Reconstruction Company (ARC) was incorporated, as an NBFC, to take over the assets and NPAs of the Hous

Benefits of incorporating an Asset Reconstruction Company (ARC) are as follows: As the cash realization activity from defaulting borrowers is a lengthy and cumbersome procedure, relieving banks of the burden of NPAs will allow them to focus better on managing the core business including providing new business opportunities for the ARC. The transfer should help restore depositor and investor confidence by ensuring the lender's financial health. The banks use it as a method to hive off the bad loans from their balance sheet. ARCs can maximize recovery value while minimizing costs. ARCs also help building industry expertise in loan resolution and restructuring management, besides serving as a catalyst for important legal reforms in bankruptcy procedures and loan collection. ARCS play an important role in developing capital markets through secondary asset instruments.