The Reserve Bank of India (RBI) has highlighted that some Indian asset reconstruction companies (ARCs) are bypassing regulations to enable evergreening of distressed assets. This practice involves granting further credit to nearly defaulting firms to help them repay existing loans. RBI Deputy Governor Swaminathan J. mentioned in a recent speech that these ARCs are exploiting their special status by structuring transactions to circumvent rules. To mitigate systemic risks, the RBI has increased supervision and stressed the importance of robust risk management and compliance functions within ARCs.