M/s ABC Assets Reconstruction Company incorporated in January, 2024 and Net Worth is ₹ 1,00,00,000/- and applied for Registration with Reserve Bank of India as an NBFC (Asset Reconstruction Company). During the Pendency

Section 3 of SARFAESI Act provides that no Assets Reconstruction Company shall commence or carry of the business of securitization or asset reconstruction without: Obtaining a Certificate of Registration; and Having Net Owned Fund of not less than two crore rupees or such other higher amount as the Reserve Bank may, by notification, specify: Provided that the Reserve Bank of India (RBI) may, by notification, specify different amounts of owned fund for different class or classes of asset reconstruction of companies which is ₹ 100 crore. So, in the given case being proposed ARC net worth is ₹ 1,00,00,000/- is less than Required Net worth of ₹ 100,00,00,000/- and also not under any specific category or exemption provided is not eligible for Registration as ARC under SARFAESI Act. Further without granting a Valid Registration certificate from RBI as an Asset Reconstruction Company is not entitled to commence or carry the Business. Ground of Rejection of application of Asset Reconstruction Company: The Reserve Bank may, for the purpose of considering the application for registration of an Asset Reconstruction Company to commence or carry on the business of Securitization or Asset Reconstruction, as the case may be, require to be satisfied, by an inspection of records or books of such asset reconstruction company, or otherwise, that the following conditions are fulfilled, namely: - that the Asset Reconstruction Company has not incurred losses in any of the three preceding financial years; that such Asset Reconstruction Company has made adequate arrangements for realization of the financial assets acquired for the purpose of securitization or asset reconstruction and shall be able to pay periodical returns and redeem on respective due dates on the investments made in the company by the qualified buyers or other persons: that the directors of Asset Reconstruction Company have adequate professional experience in matters related to finance, securitization and reconstruction. that any of its directors has not been convicted of any offence involving moral turpitude; that a sponsor of an Asset Reconstruction Company is a fit and proper person in accordance with the criteria as may be specified in the guidelines issued by the Reserve Bank for such persons; that Asset Reconstruction Company has complied with or is in a position to comply with prudential norms specified by the Reserve Bank. That Asset Reconstruction Company has complied with one or more conditions specified in the guidelines issued by the Reserve Bank for the said purpose. RBI can reject the application of M/s. ABC for registration as an ARC if any of the above grounds is not satisfied.