Reconstruction of Financial Assets | CFMARC
 

Reconstruction of Financial Assets

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act) has laid down the business and operational framework for Asset Reconstruction Companies. The primary business of CFM ARC is acquisition and resolution of financial assets acquired from banks and financial institutions. In addition, as permitted by the RBI, CFM ARC will also undertake portfolio resolution advisory services for resolving the stressed assets of banks and financial institutions.

Reconstruction of financial assets is one of the major activity that includes organization's capital structure of the company. CFM ARC has an eminent Board Members and Management team that come with extensive banking experience and stressed asset recovery/resolution specialization that helps in reconstruction of financial assets.

Asset Selection Parameters

  • Sole Banker (preferred) – may consider 2-3 banks

  • SME & MSME sector

  • Sufficient asset backing with exclusive charge

  • Effort will be made to resolve the case within 2-3 years

  • Sufficient market intelligence about the stressed asset

Acquisition of Assets

CFM ARC will acquire assets spread all over India with special focus on state of Maharashtra, Gujarat, Rajasthan and Madhya Pradesh which are industrially developed and collectively contribute for approximately 30% of India’s Gross Domestic Product.

  • The Company’s main target class is small and medium enterprises.

  • CFM ARC would leverage the strong business intelligence network established by its sponsor company CFML.

  • CFM ARC shall also target the Non-performing loans of Co-operative Banks in Maharashtra and Gujarat.

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resolution of assets

CFM ARC shall resolve the asset acquired by adopting one of the following strategies or a combination thereof:

  • Restructuring cum rescheduling of dues payable by borrower

  • Enforcement of security interest

  • Sale or lease of part or whole of the business of borrower

  • Convert any portion of debt into shares of borrower company

  • Change in or takeover of management of the business of the borrower

    Additionally, CFM ARC would focus on:

  • Optimising value through speedier resolution

  • Leveraging its advisory bandwidth for efficient resolution

  • Using its pan-India network to achieve cost efficiency

The resolution strategy will be in line with the resolution policy adopted and framed under the extant guidelines for ARCs. The aim is to always adopt a resolution strategy that is fully compliant and in accordance with the extant RBI guidelines.

CFM ARC will adhere to internal risk control mechanism in its process of acquisition and resolution.

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