Asset Reconstruction Company (Arcil) aims to increase its assets under management (AUM) to Rs. 20,000-22,000 crore in the next two to three years, up from Rs. 16,800 crore at present, chief executive officer and managing director Pallav Mohapatra told. The country’s oldest asset reconstruction company plans to raise the share of retail assets to 40%, up from the current 30%.

Asset reconstruction companies (ARCs) could post a de-growth in their assets under management (AUM) in FY25 due to a drop in the availability of large-ticket stressed or non-performing assets (NPAs). According to Crisil Ratings, the AUM of private ARCs, as measured by outstanding security receipts (SRs), could de-grow by 7-10 per cent this fiscal. It estimates private ARC's AUM at ₹1.2-1.25 lakh crore by FY25 end, lower than the ₹1.35 lakh crore as at FY24 end.

Pallav Mohapatra, MD and CEO of Asset Reconstruction Company (ARCIL), said the stress in banks’ corporate loan books has reduced considerably since the regulator tightened underwriting standards after the asset quality review conducted in 2015. Corporates also started deleveraging and did not opt for significant capacity expansion. If they did intend to raise capital for expansion, they chose the capital market route rather than bank loans, further lowering the share of corporate loans in banks’ overall advances. This led to lower availability of higher-quantum corporate bad loans for ARCs. ARCIL’s AUM rose to ₹16,800 crore in Q2FY25 from ₹16,400 crore in Q2FY24.

Avenue Capital-backed Asset Reconstruction Company (India) Ltd, or Arcil, has a plan in place to grow its business despite bad loans in corporate sector coming down. The company has set its sight on MSME and retail loans to increase its assets under management. The company has set its sight on MSME and retail loans to increase its assets under management, Arcil Managing Director and Chief Executive Officer Pallav Mohapatra told VCCircle. While there may be consolidation in the sector due to changes in regulations, Arcil will focus on organic route to grow its AUM, Mohapatra said. Mohapatra also spoke about why it is difficult to buy microfinance loans, potential growth drivers, and why ARCs find it difficult to go public.

The Indian banking system has undergone a notable transformation, marked by a resurgence in both public and private sector banks. During the recent BT Best Banks & NBFCs Awards Jury Meet Pallav Mohapatra, CEO & MD of Arcil Ltd, highlights the transformative impact of the Insolvency and Bankruptcy Code (IBC) and the National Company Law Tribunal (NCLT). As India’s banking sector undergoes a cleanup, the government’s asset quality review and strategic recapitalization of PSU banks play a crucial role. Amidst rigid regulations, the Reserve Bank of India (RBI) emerges as a proactive force, turning troubled assets into opportunities.

US-based Avenue Capital-backed Asset Reconstruction Company (India) (Arcil) has bought nearly ₹400 Crore worth of bad loans or non-performing assets (NPAs) of Saraswat Bank with a haircut of nearly 86%. Saraswat Bank, one of the largest cooperative banks in the country, sold the NPA portfolio comprising retail and micro, small and medium enterprises (MSME) loans as a clean-up for future growth capital. The bank has concluded the sale of the NPA portfolio it had announced in the previous quarter. Initially planning to sell assets amounting to ₹410 Crore, Saraswat Bank later reduced the pool to ₹385 Crore, seeking bids on a 100% upfront cash basis as it wanted to clean up its loan book for future growth. BOB Capital Markets was the process advisor.