One day a letter or an SMS tells you your loan is no longer with your bank. It has been sold to an Asset Reconstruction Company. The loan changing hands does not erase what you owe, and it does not erase what you are owed. The one rule worth knowing is that your securities must be released once the dues are repaid or realised.
Banks sometimes decide that chasing a stressed loan is not worth their own staff time. So they sell the account to a company that does only that work. That company is an Asset Reconstruction Company, or ARC.
Think of a landlord who sells a building while you still live in it. The building has a new owner. Your rent does not disappear, and the new owner cannot pretend your old receipts never existed. What changes is the person you deal with.
ARCs are regulated by the Reserve Bank of India, under the Master Direction - Reserve Bank of India (Asset Reconstruction Companies) Directions, 2024. It is linked at the bottom of this page and almost everything below comes out of it. What this page cannot tell you is your own outstanding figure, or what the sale does to your credit report. Those depend on your papers, so get them in writing.
| Changes | Stays the same |
|---|---|
| Who you pay. Money goes to the ARC, not your old branch. | The money is still owed. A sale is not a waiver. |
| Who you negotiate with. Repayment talks are now with the ARC. | Your own records. Receipts and old bank letters stay useful. |
| Who holds the file, the outstanding figure and, on a secured loan, your security papers. | The value of putting things in writing. It matters more now. |
| Who must release your securities at the end. That duty sits on the ARC. | Your ability to ask for a written computation before paying. |
| Where complaints go. To the ARC and its grievance redressal officer. | Your ability to escalate in writing when you are ignored. |
Here is the most useful line in the whole Master Direction, quoted word for word:
ARCs shall release all securities on repayment of dues or on realisation of the outstanding amount of loan, subject to any legitimate right or lien for any other claim they may have against the borrower. If such right of set off is to be exercised, the borrower shall be given notice about the same with full particulars about the remaining claims and the conditions under which the ARCs are entitled to retain the securities till the relevant claim is settled/ paid.
The first half is your lever. Repay the dues, or let the security be realised, and the ARC has to release all securities. That is how your original sale deed or pledged papers come back to you. It is not a favour. It is in the rulebook the ARC is regulated under.
The second half is the honest catch. The release is subject to any legitimate right or lien for any other claim the ARC may have against you. In plain words, if the ARC genuinely has a separate claim, it may hold your securities against it.
But look at what the rule does next. It does not let an ARC say “we have another claim” and go quiet. If that right of set off is exercised, you are to be given notice, with full particulars about the remaining claims, and the conditions under which the ARC may keep your securities until that claim is settled or paid.
So if your documents are not handed back after you have paid, your response is not a request. It is a demand, in writing: which claim, what amount, and on what conditions will my securities be released.
Send this in the week you learn about the transfer, not after a dispute starts.
To, The Grievance Redressal Officer [Name of the Asset Reconstruction Company] [Registered office address] Subject: Loan Account No. [____] transferred to your company. Request for assignment intimation, outstanding computation, list of securities held and confirmation on release of securities. Sir / Madam, I am the borrower in the above loan account, originally with [bank and branch], and I am informed that it now stands assigned to your company. I request the following, in writing: 1. A copy of the intimation of assignment of my loan account to your company, with the effective date of assignment. 2. The exact amount you claim as outstanding as on date, a statement showing how it was computed, and the account statement from the date of assignment. 3. A complete list of my securities, title deeds and original documents now held by your company, and where they are held. 4. Your written confirmation that on repayment of the dues, or on realisation of the outstanding amount of the loan, all my securities and original documents will be released and returned to me. 5. If you claim any right of set off or lien for any other claim against me, notice of the same with full particulars of that claim and the conditions under which you are entitled to retain my securities until it is paid. 6. The name, designation and contact number of your designated grievance redressal officer, and a copy of your Fair Practices Code or the link at which it is placed in the public domain. 7. The name and contact details of any recovery agency engaged by you on my account. Please treat this as a formal request and acknowledge receipt. Yours faithfully, [Full name] [Mobile] [Email] [Address] [Date]
Send it by email and by registered post the same day, and keep the receipt. Points 5 and 6 use the Master Direction's own words back at the ARC. It says the name and contact number of the designated grievance redressal officer should be mentioned in the communication with borrowers, and that the Fair Practices Code shall be placed in public domain for information of all stakeholders.
Work up the ladder, and do every rung in writing.
One. Send the request above, with your payment proof attached, and get an acknowledgement. A phone call is not a record.
Two. Escalate to the grievance redressal officer by name. The Master Direction says ARCs should constitute a grievance redressal machinery within the organisation, and that the designated officer should ensure genuine grievances are redressed promptly. If nobody gave you that name, ask for it.
Three. Ask for the company's Fair Practices Code, which has to be in the public domain. If it promises more than the minimum on release of securities, hold the ARC to its own code.
Four. Write to the registered office, addressed to senior management, enclosing every earlier letter and acknowledgement. Keep it factual: dates, amounts paid, what you asked, what came back. If that still goes nowhere, take proper legal advice on which forum fits your loan. Anyone who answers that without reading your papers is guessing.
One thing is worth knowing while you climb. The Master Direction says that in recovery of loans ARCs shall not resort to harassment of the debtor, and that ARCs as principals are responsible for the actions of their recovery agents. So a rude agent is the company's problem, not a separate one. Log every call.
Be clear-eyed. An ARC is a private company, so the Right to Information route does not reach into it. Do not lose weeks filing at the wrong door.
The narrower use does work. If your original lender was a public sector bank, that bank is a public authority, and you can ask it under RTI for records of your own loan account, including the date of the assignment and the intimation sent to you. The bank may still withhold parts as commercially confidential or as another party's information, so treat this as a way to pin down your own paper trail.
The AI RTI Drafter shapes the application, the Timeline Tracker tells you when the reply is late, and the First Appeal Builder handles the next step if the bank stays silent. The RTI Act, 2005 is worth a skim, and The RTI Playbook covers keeping a paper trail that survives an argument.
This page cannot tell you your figure, and nobody should give you one over the phone. Ask in writing for the outstanding as on date with the computation, then check it against your own statements.
The sale is not a cancellation. Fix at once where the money now goes, and get that payment instruction in writing, so a later dispute cannot be pinned on you paying the wrong account.
That is the strongest rule on your side. The Master Direction requires ARCs to release all securities on repayment of dues or on realisation of the outstanding amount of the loan, subject to any legitimate right or lien for any other claim against you.
Ask it to do what the rule requires. Where a right of set off is exercised, the borrower is to be given notice with full particulars about the remaining claims and the conditions under which the securities may be retained.
No. It is a private company, not a public authority. Where your original lender was a public sector bank, file the RTI with that bank about your own account records instead.
The Master Direction says ARCs shall ensure they or their agents do not resort to intimidation or harassment of any kind, verbal or physical, including threatening or anonymous calls, or calling the borrower before 8:00 a.m. and after 7:00 p.m.
The Master Direction requires ARCs to become members of all credit information companies, keep the data updated regularly, and ensure that no instance of repayment, including the last instalment, is left unreported. It also asks them to appoint a nodal officer for dealing with those companies.
Rules get amended. Open the RBI page and check the current text before you rely on any line above.