Bad-loan market may see a flurry of activity after lull of past few years

The bad loan market may get a boost from the fact that Centre may not indulge state-run banks anymore by recapitalising them as in the past

Banks are set to sell dud-loans worth Rs 90,000 crore of 22 firms in the first tranche to the National Asset Reconstruction Company (NARCL). It’s reason for cheer given that such sales to asset reconstruction companies (ARCs) have been poor in recent times. In fiscal 2020, their assets under management (AUM) contracted by 4 per cent; and in fiscal 2021, it fell by another 100 basis points to Rs 1.07 trillion. So, why are we where we are?

“In FY21, we sold nine out of 10 assets for cash. This year (FY22) too, whatever we have sold (20-23 assets) if