OUTLOOK & MARKET SIZE
Ever since the commencement of Arcil's operations, the total NPAs in the Indian Banking system has more than doubled, despite the economic upheavals witnessed in the past decade.
Although economic growth has picked up 2014 onwards, an improvement in bank asset quality will be visible only after government measures to boost the economy, including higher public spending and faster approvals for large infrastructure projects, faster investment cycle and perk up demand.
The recovery is contingent on how the Indian economy performs. If the macro-economic situation deteriorates, bad loans may increase.
Given the small capital and low systemic absorption capability, asset reconstruction companies (ARCs) will acquire non-performing assets (NPAs) worth only Rs 12,000-14,000 crore in 2015-16.