ARCs acquire Rs 1.14 trillion worth of dues in April-December 2024

Recoveries to touch Rs 38,000 crore

The asset reconstruction companies (ARCs) acquired dues worth Rs 1.14 trillion from sellers, including banks and finance companies, in April–December 2024, according to data on the website of the Association of ARCs in India.

 

The outstanding dues bought from sellers stood at Rs 11.14 trillion in December 2024, up from Rs 10 trillion at the end of March 2024.

 

Recoveries from bad loans are expected to be about Rs 38,000 crore in the current financial year ending March (FY25), up from Rs 33,000 crore in FY24. Recoveries stood at Rs 33,000 crore in April–December 2024, said Hari Hara Mishra, chief executive officer, Association of ARCs in India.

 

The outstanding receipts (SRs) issued by ARCs for purchasing stressed loans stood at Rs 1.37 trillion as of December 31, 2024, down from Rs 1.4 trillion as of March 31, 2024. ARCs issued SRs worth Rs 18,449 crore and redeemed SRs worth Rs 20,637 crore in April–December 2024.

 

Mishra said that while retail constituted only 14 per cent of total SRs issued as of March 2024, the pace of growth of SRs for retail assets has been higher during the nine months of the current FY25. This increased the share of retail to 21 per cent at the end of December 2024.

 

Last month, rating agency Crisil Ratings said ARCs are likely to see the cumulative recovery rate of security receipts (SRs) improve by up to 15 percentage points to 75–80 per cent in the next financial year (FY26). The improvement in recoveries will be driven by factors such as the healthy performance of stressed assets in key infrastructure sectors like thermal power and roads, it said.

 

The cumulative recovery rate on SRs is estimated at 65–70 per cent for the current financial year. The recovery rates were 36 per cent in FY23 and 49 per cent in FY24.

 

The higher share of retail and low-vintage assets, along with lower growth in new acquisitions compared to incremental recoveries, would also aid performance.