A sharp improvement in banks’ asset quality and decadal-low non-performing assets (NPAs) has raised concerns about the scope of business scale that asset reconstruction companies (ARCs) can operate in. But India’s massive credit base provides a large potential pool of bad loans for ARCs to source from.

Bank credit outstanding had crossed Rs 220 lakh crore in July 2026, latest data released by the Reserve Bank of India (RBI) shows. Around Rs 30 lakh crore gets added to India’s systemic credit market, according to Arcil managing director and CEO Phanindranath Kakarla. 

The credit base of non-banking financial companies (NBFCs) was Rs 59.89 lakh crore as on July-end 2026, growing at 14.9% from the year-ago period. Together, banks and NBFCs accounted for almost Rs 280 lakh crore until July-end. 

Even if a small portion of the credit base turns stressed, it is a huge opportunity for the entire ARC industry to grow. ARCs find a business model in such large piles of bad loans. They acquire stressed assets from banks and NBFCs. Their other task is to make recoveries from such assets, which is the income they generate. The gap between these two principal tasks is the profit they earn. 

Asset Reconstruction Company India Ltd (Arcil) is a big player in this and is heading for an initial public offering (IPO). The entire issue is an offer for sale (OFS) by existing shareholders and no net proceeds will come into the company. 

For Arcil, which has 68.5% of its assets under management (AUM) from corporate NPAs as of March 2026, there is need to align its business as bank credit is moving more towards retail. Around 8% of the ARC’s stressed assets are from small and medium enterprises (SME) while the remaining is retail.

In the current credit cycle, retail stressed assets are likely to grow faster than corporate assets. Corporates have been deleveraging during the Covid-19 years rather than taking on new debt. This has made banks turn their focus to the retail side of credit. 

As credit moves in cycles across asset classes, including corporate, real estate, unsecured retail and secured retail housing, Arcil has to make its business adjustments.

Recoveries, including from old legacy assets, is part of the big drive as the strategy is to churn the book within four years. For the last four years, Arcil’s average recovery collection has been around Rs 3,500 crore. 

Arcil has fixed its IPO is price band between Rs 132-139 per share. At the upper end of the price band, the company will be able to raise Rs 733 crore and at the lower end Rs 696 crore. 

The issue will open on 9 September and close on 11 September, with listing scheduled for 17 September.