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Asset Reconstruction Companies to scale up operations in Indian banks

The primary reasons for spurt in stressed assets include aggressive lending practices, wilful default, loan frauds, corruption in some cases, and economic slowdown

Asset Reconstruction Companies to scale up operations in Indian banks
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Abhijit Lele
  • The country’s banking system, with a huge pile of stressed assets, has provided a huge business opportunity for Asset Reconstruction Companies (ARCs) in India.
  • The primary reasons for spurt in stressed assets include aggressive lending practices, wilful default, loan frauds, corruption in some cases, and economic slowdown.
  • Private banks have been the most aggressive on asset sales. Public sector banks lagged in asset sales, mainly owing to large haircuts and various management issues.
  • During 2017-18, the acquisition cost of ARCs as a proportion to the book value of assets increased, indicating better realisations by banks on sale of stressed assets.

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First Published: Dec 31 2018 | 10:32 PM IST

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