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ARC — Asset Reconstruction Company
Specialised companies that buy bad loans (NPAs) from banks at a discount and attempt to recover them through restructuring, settlement, or asset sale.
ARCs are regulated by the RBI and operate under the SARFAESI Act framework. When a bank sells an NPA to an ARC, the borrower's lender changes — they now deal with the ARC instead of the original bank.
ARCs are often more flexible than banks in negotiating settlements because they have purchased the debt at a discount and have room to offer better terms. Understanding this dynamic — and knowing what the ARC paid for your loan — is a critical negotiating tool.
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