ARCs acquire stressed loans worth ₹16,876 cr in Q1: ARC Association

The association flagged the risk of rising stress in the system due to the likely adverse fallout of high tariffs being imposed by the US on Indian goods exports

The asset reconstruction companies (ARCs) in India acquired stressed loans worth ₹16,876 crore in the first quarter of the financial year 2026 (Q1FY26), showing a 22 per cent year-on-year (Y-o-Y) growth. 

They had acquired stressed loans, non-performing assets (NPAs) plus loans with dues up to 90 days, worth ₹ 13,852 crore in the first quarter of FY25, according to data from Association of ARCs in India. The association also flagged the risks of uptick in stress in the system due to likely adverse fallout of high tariffs being imposed by the US on the exports of Indian goods.  They issued security receipts (SRs) to the tune of ₹4,388 crore in Q1FY26, a 19.3 per cent on year growth. They had issued SRs worth ₹3,678 crore in Q1FY25.  The pace of redemption of SRs in Q1 was higher at 22 per cent Y-o-Y. 

 

The redemption of SRs in absolute terms amounted to ₹7,725 crore in Q1FY26, up from ₹6,310 crore a year ago. This led to contraction of outstanding SRs, considered as assets under management (AUM), to ₹1.30 trillion at end of June 2025 from ₹1.36 trillion in June 2024. 

Hari Hara Mishra, chief executive officer, ARC Association, in a statement said, “Overall Q1 performance this year was slightly better than Q1 of last year (Q1FY25). However, negative AUM continues. Things are likely to change, as pockets of stress are getting broad based. The global uncertainty and rise of insolvency in major economies indicate stress is building up, and its contagion effect on domestic firms cannot be ruled out.” 

“NPAs are cyclical and do not have a linear end. Going forward, book building at ARCs is likely to grow,” Mishra added. 

Referring to SR issuance, the association said ARCs corporate SRs issued in Q1FY26 stood at ₹2,675 crore, down from ₹3,182 crore a year ago. However, retail acquisition jumped with SRs issued ₹1,713 crore this Q1 vs a mere ₹496 crore. The 3 times jump in retail SRs provide a glimmer of hope against declining corporate SRs. 

Recovery continued to be robust with ₹14,046 crore in Q1FY26, against a total recovery of 46,621 crore in FY25. Restructuring measures continued to be the dominant resolution strategy accounting for 40 per cent Y-o-Y in recovery in Q1, 26 per cent via settlement, and 34 per cent through Asset Sales, the association added.