New Delhi: SME financing institution Small Industries Development Bank of India (SIDBI) today said its asset reconstruction arm will get operational within next six months. SIDBI Chairman and Managing Director R M Malla said, "We will be applying to RBI for approval very shortly and hopefully the Asset reconstruction company will be operational in the next 5-6 months subject to regulatory clearances."

ARC is registered with Reserve Bank of India(RBI) as Secularisation or Reconstruction Company under the SARFAESI Act for the purpose of carrying on business of reconstruction of banks' non-performing assets.

Malla hoped that RBI approval should come by the end of May 2008.A subsidiary has been incorporated called India SME Asset Reconstruction Company (ISARC) with the initial paid up capital of Rs 1 crore.The company would focus on acquisition of loans to the small and medium enterprises, he added.

The estimated non-performing loans to SME sector by public sector banks stood at over Rs 8,000 crore.SIDBI, as a lead partner, have about 26 per cent stake in the company. Remaining stake is distributed among 10 public sector banks, LIC and two state finance corporations.(PTI)