ARCs have been used world-wide, particularly in Asia, to resolve bad-loan problems, and have had a varying degree of success.
Experience of some of the countries having used ARCs is given below:
•  In 1980s, U.S. used government sponsored ARC - Resolution Trust Corporation (RTC) to overcome thrift crisis. RTC acted as a “bad bank” and functioned as an effective sales mechanism for disposal of assets.
•  In early 1990s Mexico and Sweden demonstrated successful use of ARC mechanism (Fobaproa and Securum respectively) as a “bad bank” and to clean and reprivatise/ recapitalise the banks.
•  Korea used KAMCO as the nodal agency for acquiring and disposing NPAs. KAMCO has used securitisation and joint venture route for investor participation in the assets.
•  In Malaysia, Danaharta is the centralized ARC set up at the instance of Government. Government of Malaysia restructured and consolidated the banking system and also guaranteed the issuance of asset based security (ABS) papers by Danaharta, which were backed by NPAs acquired. Danaharta acts as a “bad bank” with a focus on resolution of the assets rather than rapid liquidation to third party investors.
•  Recently In Taiwan, the ARC model envisages liquidation of assets through the sale of assets to investors. Government of Taiwan allowed the banks to phase out the losses on such transfer over a period. Besides, the Government also provided several fiscal incentives for transfer to ARCs.
•  Japan, China, Thailand and Indonesia have also used ARC mechanism during the South-East Asian crisis.
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