It is a company registered under the company act 2013 for the purpose of securitization & it also requires a registration from RBI .and is regulated by the section 3 of the SARFAESI Act, 2002.Asset reconstruction company is a specialized financial institution that buys the bad loan, NPAs from banks & financial institution in order to clean up their balance sheet. It takes over the loan and advances from the bank and financial institution for recovery, so it acts as a recovery agent for the banks also.
On acquisition of financial assets the securitization or reconstruction company become the owner of the financial asset and step into the shoes of the lender bank or FIs.
Asset Reconstruction Company, existing on the commencement of this Act, shall make an application for registration to the Reserve Bank before the expiry of six months from such commencement and notwithstanding anything contained in this subsection may continue to carry on the business of securitization or asset reconstruction until a certificate of registration is granted to it or, as the case may be, rejection of application for registration is communicated to it.