Q. Which among the following is the major functional area of the Asset Reconstruction Companies?
Answer: Non Performing Assets
Notes: Asset Reconstruction Companies (ARCs) primarily focus on the management and resolution of Non-Performing Assets (NPAs). They acquire distressed assets from banks and financial institutions to rehabilitate and recover value. In India, ARCs were established under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, to address the growing issue of NPAs, which can adversely affect the banking sector's health. As of 2021, NPAs in Indian banks were estimated to be around 7.5% of total loans, which indicates the critical role of ARCs in financial stability.