Asset Reconstruction Company :

An asset reconstruction company’s role is to takeover loans or advances from the bank or financial institution for the purpose of recovery. In other words any securitization company or reconstruction company acquires any right or interest of any bank or financial institution, in any financial assistance for the purpose of realization of such financial assistance it is called as asset reconstruction.

On acquisition of a financial asset, the securitization or reconstruction company becomes the owner of the financial asset and steps into the shoes of the lender bank or financial institution. This acquisition can also be said as a sale of asset without recourse to the bank or financial institution. The regulatory authority for all securitization or reconstruction companies is the Reserve Bank of India. It is a company registered under the Companies Act,1956 for the purpose of securitization and it also requires a registration from the RBI as per the SARFAESI Act.