Unlocking the asset value of non-performing assets (NPAs) would be a tough task for the asset reconstruction companies (ARCs) as it is expected to grow only at a slower pace of around 11 per cent in 2015-16. Assets under management of ARCs will taper to 11 per cent in fiscal 2016 compared with 30 per cent in 2015 which came atop a four-fold increase in 2014, said a study conducted by The Associated Chambers of Commerce and Industry of India (Assocham) jointly with research firm and rating agency, CRISIL.
NPAs worth only about Rs.12,000 crore-Rs.14,000 crore are expected to be bought by ARCs in the current fiscal 2016 thereby underscoring low systemic absorption capability, it added. “Though gross NPAs of Indian banks will edge up in fiscal 2016 by 20 basis points to 4.5 per cent of advances ( by Rs 60,000 crore) to Rs. four lakh crore, however only a fifth of the incremental NPAs is likely to be sold to ARCs,” noted the study titled ‘ARCs-The new normal: Growth tempered, recovery in the crosshairs’.
