KL News Network
Jammu
With the new banking law SARFAESI giving banks a right to takeover the collaterals, extended to J&K by the Supreme Court, Finance Minister Dr Haseeb Darbu has finally created a state subject institution – the Asset Reconstruction Company. To be owned in partnership with J&K Bank – the latter holding 49% equity, the company will take impaired assets and make a new business.
The J&KARC was part of Drabu’s first budget and in last two years the formalities were completed. The company will be mandated to buy the impaired assets of state subjects that are mortgaged to financial institutions. These will include some of the assets of the commercial banks as well of other financial institutions like the State Finance Corporation.
The company will own a “special situations fund” that shall focus on constructive investing in distressed assets for restructuring and turnaround of “state subject owned businesses”, as per Drabu.
Finance Minister said the business viability of the ARC is not in doubt because most of the impaired assets have substantial collaterals. “Indeed, these are hugely over collateralized,” he said, insisting, “In other words, the assets of SMEs in J&K are grossly underleveraged.”
