ARCs seek higher sponsor shareholding cap

ARCs urge govt to raise sponsor shareholding cap to 26% from 10%

Asset reconstruction companies (ARCs) are urging the government to increase the percentage of sponsor shareholding in these companies, a move that could encourage strategic investors like private equity funds to play a more meaningful role. They also want the government to permit them to lend or invest in shares of distressed companies — in addition to buying their non-performing assets (NPAs). 

The shareholding limit for a person deemed to be a sponsor in an ARC needs to be enhanced from 10 per cent to 26 per cent, according to ARCs. Under the current provisions of the SARFAESI Act, a sponsor