Arcil allots 1.58 crore shares to 21 anchor investors at Rs 139 per share ahead of Rs 733 cr IPO; names include Goldman Sachs India Asset Management Company, WhiteOak Capital, Bajaj Life Insurance and Tata Mutual Funds.
Around 68.5% of Arcil’s AUM is from corporate NPAs. As bank credit moves more towards retail, the IPO-headed ARC is prepared to align with credit cycles.
Asset reconstruction companies issue security receipts worth Rs 4,388 cr in Q1; retail SR issuance jumps three-fold YoY to Rs 1,713 cr.
Relaxations in new circular timely as resolution of small loans via settlement process will be quicker; this when ARCs are seeing jump in retail and microfinance bad loans in their catchment area.
Indian Overseas Bank is selling 46 bad loan accounts worth Rs 11,500 cr; invites expressions of interest from ARCs.
After review, RBI was satisfied that ECL Finance and Edelweiss ARC have taken the necessary remedial actions and committed to comply with regulatory guidelines on an ongoing basis.
Several asset reconstruction companies are struggling, a few are dead and some are set to die amid limited availability of bad loans to source and a regulatory requirement to increase their net worth.
ARCs have to become members of all credit information companies and submit requisite data to them in prescribed format.
Less than a fortnight back, RBI had imposed business curbs on two Edelweiss group entities, including Edelweiss ARC, for regulatory breaches and allegations of evergreening of loans.
RBI urges asset reconstruction companies to follow better governance, risk management and compliance; stresses on need for responsible conduct in recovery process.
After launch of one-time settlement regulation on October 2022, ARCs started following measured steps to ensure realisations; recovery timelines can get stretched by three to four quarters, according to India Ratings and Research.
For Indian banks, retail and MSME segments could see rise in bad loans even as they flag high growth rates, SBI managing director Ashwini Kumar Tewari said.
AUM of ARCs is expected to grow almost 10% this fiscal to Rs 1,19,000 crore after a period of relative stagnation, according to a Assocham-Crisil report.
Small ARCs may find it challenging to bring in additional capital to meet higher minimum net-owned fund requirement; this may eventually lead to consolidation.
About fourth of restructured MSME loans could slip into NPAs while absolute quantum of bad loans in retail segment may rise. Corporate loans for ARCs are at a cyclical low.
