The Reserve Bank of India (RBI) will formalise the 'fit and proper' criterion for sponsors of asset reconstruction companies and will soon come out with the regulations for the same, a central bank official said on Wednesday.

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Manoranjan Mishra, a chief general manager at the department of non-banking regulation at RBI, said there is a growing interest in the asset reconstruction companies (ARCs) and the central bank has received several applications for setting up new ARCs.

"For ARCs, sponsors have to be 'fit and proper'. The criterion for fit and proper is something that we are working on and we'll come out with some regulations around it. It will be more formalisation of what we already have," Mishra said at an NBCF meet organised by industry lobby IMC.

He said even today those who give applications to set up ARCs have to justify how they consider themselves fit and proper to be ARC sponsors to get a licence.

There are 25 ARCs operating in the country at present. Mishra said there is a need to deepen the market for security receipts which are issued by ARCs by developing a secondary market and also allowing more players.

On the peer-to-peer (P2P) lending, he said RBI has got several applications and is in the process of giving licences to those qualify.

Last October, RBI had issued directions for NBFCs that operate P2P lending platforms.

"We understand that P2P players are happy to work in a space that is regulated rather than work with uncertainties," Mishra said.

The central bank is also planning to put out a reference document to be followed by account aggregator platforms, as there are some concerns around protection of customers and their data.

Talking about account aggregators, he said there is tremendous potential for this business as the kind of information that will be available through them will be of help to lenders and other stakeholders.

Account aggregators, to be authorised by RBI, can pull out information on financial assets of customers, on request, consolidate them and give them back to customers or users who want the information.

Mishra said the ombudsmen scheme in the NBFCs sector is currently covering only deposit taking NBFCs but soon it will be extended to all NBFCs.

First Published:Jun 13, 2018 2:20 PM IST