The Hindu Business Line : ARCIL names ITCOT as resolution agent for Maharashtra, Gujarat

ARCIL has appointed the Industrial and Technical Consultancy Organisation of Tamil Nadu (ITCOT) as its resolution agent for recovery of bad loans in Maharashtra, Gujarat and Goa.

ARCIL is the first asset reconstruction company (ARC) in India and is promoted by SBI, ICICI and IDBI.

Asset reconstruction companies take over bad loans from banks and financial institutions, create a market for such assets and enable a clean-up of non-performing assets (NPAs) in the system. NPAs were estimated at Rs 1,06,000 crore in March 2004.

Loans from SBI and State Bank of Hyderabad worth Rs 55 crore (total outstanding dues from borrowers at Rs 145 crore) was the first portfolio that ARCIL outsourced to ITCOT. These loans cover various industry segments, including textiles, chemicals, pharmaceuticals, leather and engineering.

Mr S.V. Venkatakrishnan, Vice-President and Group Head-Asset Resolution, ARCIL, said the institution had acquired assets worth Rs 7,000 crore from 116 borrowers in the eight months of operation up to March 31, 2004. The company was likely to double its acquisition during the current year, he said.

ARCIL will also enter into more outsourcing arrangements to speed up the recovery process, given its ``lean'' structure, Mr Venkatakrishnan said.

The organisation has 33 persons on board, including 11 on deputation from the main stakeholders.

Mr Venkatakrishnan said new shareholders would be added as the company proposed to increase its capital base to Rs 100 crore from Rs 25 crore.

Mr V. Krishnan, Managing Director, ITCOT, said, as per the agreement, they were given 12 to 18 months time for recovery and would be given a performance-based incentive.

ITCOT plans to set up an office in Mumbai to handle this assignment.

Mr Krishnan said there had been a number of enquiries from banks for assistance in taking possession and sale of assets under the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests) Act.

ITCOT had assisted ICICI Bank in the Mardia Chemicals case.