It has also suggested that a single NPA investor, including foreign entities, be allowed to hold 100 % of security receipts issued under any scheme.
As per the recommendations, an ARC should be allowed to appoint a manager to respective schemes to perform all activities for asset reconstruction under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) 2002. It further said that the applicability of capital adequacy requirements to financial assets acquired by the ARCs needed to be removed and asset classification norms be made consistent across different lender categories.
PwC said that it was desirable to frame ARC registration requirements to ensure that only ARCs sponsored by reputed parties with adequate financial resources were granted registration possibly with minimum net-owned fund criterion of Rs 5 crore.
The report underlined the need to allow banks and financial institutions to amortise losses over five years for capital adequacy computations. It added that the desired NPA levels and time-frame for banks and FIs should be specified.
According to the report, transfer of non-revivable NPAs by banks and FIs to ARCs should be encouraged. The report has also made a case for rationalisation of the stamp duty regime in various states.