With reference to Asset Reconstruction Companies (ARCs), consider the following statements: It is a company registered under the Companies Act. They are regulated by the RBI as Non-Banking Financial Companies (NBFCs). One ARC cannot acquire debt from another ARC. Which of the statements given above is/are correct?

[A] 1 and 2 only

[B] 2 and 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: A

Notes:

Statement 1 is correct: ARC is a company registered under the Companies Act and registered with Reserve Bank of India under section 3 of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.
Statement 2 is correct: ARCs are regulated by RBI as a Non-Banking Financial Company [NBFC] (under RBI Act, 1934). They function under the supervision and control of the Reserve Bank of India (RBI).

Statement 3 is incorrect: One ARC can be a sponsor or investor in another ARC or it can acquire debt from another ARC.

Source: Article