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N.K.Kurup
Remya Nair

Mumbai, Aug. 19 Asset Reconstruction Company (India) Ltd (Arcil), the leading collector of distressed assets in the country, has started buying non-performing retail loans,including home loans.

The company has launched the new service from August 15 under a new division called ‘Arms’, Mr S. Khasnobis, Managing Director and CEO, Arcil, told Business Line on Tuesday.

Arms will act as a recovery agent for banks and other retail lenders, competing with private agencies which are now offering this service. With the help of Indian Institute of Banking and Finance, Arcil has trained a group of employees specially for this service. “Arcil’s foray marks the creation of an organised mechanism to quarantine the retail NPAs from the banking system”, Mr Khasnobis said. The company will not just recover the loan amounts but also help borrowers to restructure loans to make repayment easier. However, Arcil will pick up only secured consumer loans, he said.

Although Arcil is now picking up distressed retail assets, distressed corporate assets continue to be its major line of business, said Mr Khasnobis.

Arcil is planning to float a $1 billion-fund for investing in distressed assets. The fund would have Indian and overseas participation, besides Arcil’s own contribution. The amount is expected to be utilised over the next eighteen months.

Arcil’s major shareholders are leading banks such as SBI, IDBI, ICICI and PNB. It has just concluded a rights issue to raise fresh funds. It is also trying to rope in some foreign investors through a private placement. Through these means, the company hopes to raise around Rs 1,000 crore. The net owned funds are expected to increase to Rs 1,500 crore after the closure of the private placement.

The company expects its balance sheet size to increase to Rs 3,000 crore by the end of the year.

On the possibility of listing Arcil, Mr Khasnobis said it has plans to go public in around two years’ time. He said the decision would, however, depend on the market situation and the company’s fund requirements.

More Stories on : Financial Institutions | Non-Performing Assets

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