Mumbai: Three years after setting it up, the Devendra Fadnavis government in Maharashtra has decided to wind up its asset reconstruction company, which was established on the lines of a similar arm in the Union government, after it failed to receive a licence to operate from the Reserve Bank of India (RBI).
The state cabinet took the decision on Tuesday to avoid any more expenditure on the company, given “it would be impossible to operate it without the RBI’s permit,” a statement from the state government said.
Chief Minister Devendra Fadnavis was helming the asset reconstruction company, called Maha ARC Limited.
Maha ARC was set up in 2022 with the stated goal of restructuring firms—cooperatives, semi-government companies, public companies and so on—that are under financial distress or on the brink of it, and with which the Maharashtra government had direct links.
However, officials said that primarily, the objective of Maha ARC was to improve the health of the cooperative institutions in the state government. It was seen as a politically significant move as the cooperative sector has traditionally been dominated by leaders from the Congress and the Nationalist Congress Party (NCP).
Officials had then told ThePrint, there were many companies with which the state government had some connection or other—either the government had made a land allotment, an equity investment, given a loan or been a guarantor for a loan. Any such company under distress was to fall under the ambit of the Maha ARC, the aim of which was to try and restructure the company and sell it instead of running it.
Maha ARC was set up with an initial capital of Rs 111 crore and was the first such asset reconstruction company to be set up by a state government.
It was set up on the lines of the National Asset Reconstruction Company Limited (NARCL), which was established by banks, with public sector banks owning 51 percent. However, unlike NARCL, the Maha ARC was wholly owned by the state government.
(Edited by Viny Mishra)
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