ARCs allowed to convert portion of debt into equity: RBI

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ARCs allowed to convert portion of debt into equity: RBI
Reserve Bank of India (RBI has permitted asset reconstruction companies (ARCs) to convert debt of crisis- ridden companies into equities as part of restructuring process, said PTI news report.

"Securitisation or reconstruction companies are permitted to convert a portion of debt into shares of the borrower company as a measure of asset reconstruction provided their shareholding does not exceed 26 per cent of the post converted equity of the company under reconstruction," RBI said in a notification.

Such companies are required to obtain, for the purpose of enforcement of security interest, the consent of secured creditors holding not less than 60 per cent of the amount outstanding to a borrower as against 75 per cent at present.

Dion Global Solutions  Ltd.

Story first published: Friday, January 24, 2014, 9:10 [IST]
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