The Reserve Bank of India issued the Reserve Bank of India (Asset Reconstruction Companies) Amendment Directions, 2026 on March 10, 2026, amending the RBI (Asset Reconstruction Companies) Directions, 2025 to clarify the components considered in the computation of Owned Fund of Asset Reconstruction Companies (ARCs). Exercising powers under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the RBI modified paragraph 4(11)(i)(c) to permit inclusion of free reserves (excluding revaluation reserves) and quarterly profits in owned fund calculations. However, inclusion of quarterly profits is allowed only if the financial statements undergo quarterly limited review or audit by statutory auditors. Further, the eligible profit must be adjusted by deducting a portion of the average dividend paid during the previous three financial years, calculated through a prescribed formula. The directions also require that losses in the current financial year be fully deducted from owned funds. The amendment took immediate effect to improve clarity and prudential oversight in ARC capital computation.
Reserve Bank of India
RBI/2025-26/231
DOR.CAP.REC.No.421/21.01.002/2025-26 | Dated: March 10, 2026
All Asset Reconstruction Companies (ARCs)
Dear Sir / Madam,
Reserve Bank of India (Asset Reconstruction Companies) Amendment Directions, 2026
The Reserve Bank had issued the Reserve Bank of India (Asset Reconstruction Companies) Directions, 2025 (hereafter referred as the ‘Master Direction’) on November 28, 2025, as amended from time to time. There is a need to further amend the same to provide clarification on the components being reckoned in the computation of Owned Fund.
2. Accordingly, in exercise of the powers conferred under Sections 3, 9, 10, 12, and 12A of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002), and of all the powers enabling it in this behalf, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, and in order to ensure prudent and efficient functioning of Asset Reconstruction Companies, hereby, issues the following Amendment Directions.
3. These Directions shall be called Reserve Bank of India (Asset Reconstruction Companies) Amendment Directions, 2026.
4. These Amendment Directions shall come into force with immediate effect.
5. These Amendment Directions modify the Master Direction as under:
Paragraph 4(11)(i)(c) shall be replaced by:
“(c) free reserves (excluding revaluation reserve) including quarterly profits.
Inclusion of quarterly profits shall be subject to the following conditions:
i. The financial statements shall be subjected to limited review / audit on a quarterly basis by the statutory auditors.
ii. Such profits shall be reduced by average dividend paid in the last three years and the amount which can be reckoned for inclusion would be arrived at as under:
EPt = NPt – 0.25 *D*t
Where:
EPt = Eligible profit up to quarter ‘t’ of the current financial year, t varies
from 1 to 4
NPt = Net profit up to quarter ‘t’
D = average dividend paid for / pertaining to the last three financial years Losses in the current year shall be fully deducted from Owned Fund;”
Yours faithfully,
Sunil T S Nair
Chief General Manager
