Aquisition

At CFM ARC, we follow a robust strategy for acquisition of NPLs and purchase NPLs at a realistic acquisition price from the lenders. We have an extensive network of consultants and advisors pan India with extensive experience in banking and various industries, who identify NPL cases with a potential to be revived and restructured.

Our team then follows a rigorous due diligence process to assess the legal and operational status of the account.

Some of the factors considered during due diligence and by the committee before acquisition are as follows -

High potential of recovery/resolution in the NPA account in sight before acquisition –
NPAs where turnaround and business viability is possible
Adequate underlying tangible security should be available in the form of primary
or collateral security.In case of exceptions, assets should be adequately guaranteed
by persons having significant net worth.
Average resolution period of three to five years
Preference to MSME and mid-corporate borrowers with debt in
the range of INR 1 cr – INR 1000 cr
Preference to sole banking NPAs
NPAs whereby last mile funding can revive the unit to generate adequate cash flows,
thereby making the business viable and ensuring growth.

A comprehensive acquisition note is prepared which is put forth to the CARFA comprising of senior bankers with rich experience in stressed asset resolution who approve each proposal before acquisition.

Method of Acquisition:
- ARCs acquire assets through bilateral negotiations with banks or by participating in transparent auctions. However, they are prohibited from bilateral acquisitions if the seller is their own sponsor, lender, or a group entity.

Payment Structure:
- Acquisition is typically settled through a mix of upfront cash and the issuance of Security Receipts (SRs). The minimum cash component is often 15% of the purchase price.

Net Owned Fund (NOF) Requirement:
- To undertake new acquisitions, existing ARCs must meet a minimum NOF of ₹300 crore by March 31, 2026.