The Hindu Business Line : CDC plans asset reconstruction co with ING Vysya, Corporation Bank

The UK-based CDC Group Plc is planning to set up an asset reconstruction company (ARC) in partnership with Corporation Bank and ING Vysya Bank. The Foreign Investment Promotion Board (FIPB) will study the proposal next week.

According to the proposal, CDC would hold a 48 per cent stake in the proposed company — Actis Asset Reconstruction Company Pvt Ltd — and the two Indian banks would hold a 26 per cent stake each.

However, CDC plans to increase its stake in the ARC of 74 per cent, once it becomes permissible with future changes in the Government's policy framework. The company has sought permission to bring in foreign direct investment of Rs 74 crore for this purpose.

The proposed ARC would have a capital base of Rs 100 crore and would carry out asset reconstruction and management in all forms, securitisation of non-performing assets acquired and all other related activities.

Initially, sources said, the company would be incorporated with a capital base of Rs 2 crore, which would be increased in phases according to the sizes of the assets to be acquired by the company.

According to existing RBI norms, any ARC must have net owned funds worth not less than 15 per cent of the total financial assets acquired or to be acquired by the company on an aggregate basis or Rs 100 crore, whichever is less.