At the crossroads: How are ARCs to augment their capital to Rs 300 crore?

The asset reconstruction business is in for a big change, but there are doubts if this will lead to better results

By 2026, asset reconstruction companies (ARCs) are required to augment their capital to Rs 300 crore from the current Rs 100 crore. Just how are they expected to do this? “This is the million-dollar question, given that ARCs are not able to get even moderate leverage through medium- to long-term finance,” says R K Bansal, managing director and chief executive officer, Edelweiss ARC.
 
He reckons that if ARCs have to work on pure equity play, the acquisition price of stressed assets will have to be lowered substantially to ensure a reasonable return on equity. “This will render the sale