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News: The Income Tax Department has conducted searches in four ARCs, alleging fraud in buying NPAs. The Income Tax Department conducted search and seizure operations on four asset reconstruction companies across 60 locations in Mumbai, Ahmedabad, Delhi, among other cities, on December 8. The tax department said the ARCs had adopted various unfair and fraudulent trade practices in acquiring the non-performing assets (NPAs) from banks. The amount at which the NPA has been acquired by the ARC has been found to be far less than the real value of the collateral securities covering the said asset/NPA, according to The Economic Times.

View: We believe RBI could take tough measures to prevent such anomalies and bring stricter norms in place. In turn, this  could delay the process of resolution

Impact: Negative