Private ARC AUM May Fall 4-6% as Redemptions Exceed Acquisitions: Crisil

Assets under management (AUM) of private asset reconstruction companies (ARCs), as measured by security receipts (SRs) outstanding, is expected to decline 4-6 per cent to Rs 1.05 lakh crore this fiscal after sliding 15 per cent last fiscal, according to a latest report by Crisil Ratings.

- TBG NETWORK

The rating agency said that the acquisition of stressed assets will continue to trend lower even as redemptions, which have improved in recent years, are likely to remain healthy, which will assist the ARCs.

Additionally, with the securitization of NPAs potentially disrupting the industry's status quo, ARCs may have to seek alternative opportunities to drive growth and profitability.

The Crisil Ratings further added that with the Reserve Bank of India's (RBI) draft guidelines of April 2025 providing a framework for this new product, ARCs must prepare to pivot and adapt to a rapidly changing landscape.

This fiscal, acquisitions by private ARCs will remain subdued. SRs issued last fiscal had already reduced 29 per cent to Rs 22,000 crore from Rs 31,000 crore in fiscal 2024, the report added.