Asset Reconstruction Companies(ARCs) Solutions

A large number of banks and financial institutions across the globe are struggling with their bad assets or non-performing assets which are very detrimental to the healthy growth of the business. Essentially, the work of cleaning up these bad assets from lenders’ balance-sheets is of utmost importance. But, to recover those stressed assets, banks cannot start running after their defaulters as it distracts them from their core activities and that’s why lenders need a specialized institution that can help them clean up their balance sheet, helping them in focusing on their business activities and grow more.

These institutions are called Asset Reconstruction companies (ARCs). An ARC basically buys a pool of bad assets and acquires legal rights (viz., management control of borrower’s business, auctions of securities, etc.) from the lenders on mutually agreed values, by paying cash or depositing security receipts. Once these rights are acquired, Asset Reconstruction Companies (ARCs) starts their recovery processes by exploiting various legal and statutory provisions available to them within the geographical jurisdiction of their business operation. In other words, the business operation involved in the recovery process is subject to the regulatory and legal compliance of the local authorities.

In India, one such authority that regulates the operation of Asset Reconstruction Company (ARCs) is the Reserve Bank of India (RBI). Similarly, legal remedies such as the Insolvency and Bankruptcy Code, SARFAESI Act, etc. help them to get hassle-free and early resolutions of cases.

• Once an Asset Reconstruction Company (ARCs) has purchased a pool of bad assets, the bank provides details such as the Borrower’s name, Address details, Principal amount and Interest details, etc. to ARCs typically in a . CSV files.
• These files are used by Asset Reconstruction Companies (ARCs) in setting up various processes, like ‘One-Time Settlement’, ‘re-scheduling of interest payment term for borrower’, ‘monitoring and processing the payment receipt, etc.
• Furthermore, each of these processes holds a set of activities. For example, a process named ‘one-time settlement’ has multiple activities, such as case initiation (bringing a borrower’s details into a tray), distribution of cases among recovery agents’, ‘collection of payment’, ‘payment receipt processing’, ’telephonic conversation follow-ups’, etc. Now, these activities will be performed by various users of an Asset Reconstruction Company, sitting at different levels of the team hierarchy.
• Similarly, post-collection of payment, re-adjustment in the borrower’s account – re-calculation of interest, cost incurred in receiving the payment, promise-to-pay follow-ups, approval of part payment requests, etc. are managed as well. Apart from these operations, an Asset Reconstruction Company (ARC) is also required to manage its master investor’s details, trust details, access rights of processes to its users, performance reports, compliance monitoring, and so on.

So, in light of the above-mentioned operational requirements of Asset Reconstruction Companies, ARC processing software is used to provide complete automation of the entire

ServoARC is a web-based enterprise application to streamline and automate various ARC-related processes/operations, such as the creation of trusts, allocation of cases to recovery agents, basic details updating, loan account-related information updating, NPA details, etc. The user can also update the borrower’s details such as collection status, interest/penalty calculation, promise-to-pay, calls/ follow-up trails, etc. when he/she is carrying out recovery processes. The built-in routing rules engine of the ServoARC routes the various work items through different activities of the process. The interface also allows the user to perform various operations like raising an exception, creating new work item, storing/searching trust, borrowers, updating addresses or co-applicant details, data, and files, processing various checklists, submission of bulk work items, uploading requisite documents received from the customer or 3rd parties applications associated with various activities, generation of intimation letters, report generations, etc.