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You missed payments for several months. Then the collection calls changed — different numbers, different company name, different agents. Someone told you your loan had been "sold."
This is loan securitisation and ARC sale — one of the most confusing experiences for Indian borrowers. Here is everything you need to understand.
What Is an ARC?
An Asset Reconstruction Company (ARC) is an entity registered with RBI under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act 2002. ARCs purchase stressed and non-performing loans from banks and NBFCs — at a discount — and attempt to recover value.
The economics: A bank with ₹1 crore in NPA loans might sell them to an ARC for ₹30–40 lakh. The ARC now owns the loans and must recover more than ₹30–40 lakh to be profitable.
Major ARCs in India: Edelweiss ARC, JM Financial ARC, Arcil, Phoenix ARC, Encore ARC.
What Changes When Your Loan Is Sold to an ARC
What changes: Who you owe money to (now the ARC, not the original lender) The collection agent you deal with Sometimes the urgency and aggressiveness of collection
What does NOT change: The outstanding amount (it is what it was at transfer) Your rights as a borrower (all RBI protections still apply) The fair practices code (ARCs must follow the same recovery guidelines) SARFAESI provisions (for secured loans)
ARCs and OTS: Your Negotiating Opportunity
Here is the counterintuitive insight about ARC sales: they often create your best opportunity for a favourable OTS.
Why? The ARC purchased your loan at a discount — perhaps 30 cents on the rupee. If your outstanding is ₹3 lakh and the ARC bought it for ₹90,000, any recovery above ₹90,000 is profit for them.
This means: The ARC is often more flexible than the original bank They may accept OTS at 40–50% of outstanding where the bank might have required 60–70% Their motivation is return on investment, not collecting the full outstanding
Your approach: Confirm what company now holds your loan and their contact details Contact their settlement desk Use the same OTS negotiation strategy from Article 31 Your opening offer can be lower than with the original lender — the ARC's economics support it
Verification: Is the ARC Legitimate?
Before engaging with any entity claiming to hold your debt: Verify they are an RBI-registered ARC (rbi.org.in > NBFC List > filter for ARC) Ask for written evidence of the loan sale/assignment (the sale agreement reference) Verify you owe the amount they claim by requesting a full account statement
Fraudulent "debt buyers" exist — individuals or companies claiming to own debts who have no legal standing. Do not pay anyone claiming to hold your debt without verifying their authority.
Your Rights With an ARC
Same RBI fair practices code protections as with the original lender Right to request account statement and outstanding calculation Right to negotiate OTS Right to file harassessment complaints with RBI Sachet if they violate fair practices Right to file with RBI Ombudsman if disputes are not resolved
Secured loans additional note: For secured loans (property, vehicle), the ARC has SARFAESI Act powers to take possession of and sell the secured asset with fewer court delays. If you have a secured loan with an ARC, seek legal advice promptly.
HeyZ AI helps you identify your ARC, verify them, and plan your OTS strategy — free at www.sahisujhav.com
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