ENA Sectors 2025-11-11 15:31:29 <p><span style="font-size:14px"><strong>New Delhi, Nov 11 (KNN)</strong> After two consecutive quarters of decline, Indias bad loan recovery business has posted a modest rebound, led by a sharp rise in retail loan sales to asset reconstruction companies (ARCs).</span></p> <p><span style="font-size:14px">The ARC portfolio turned positive in the September 2025 quarter, coinciding with banks accelerating NPA sales ahead of the RBIs new expected credit loss (ECL) framework.</span></p> <p><span style="font-size:14px">The new framework mandates provisioning based on default probability rather than loan duration. The shift is driving lenders to offload assets earlier and improve reported balance sheet health.</span></p> <p><span style="font-size:14px">According to data compiled by the Association of ARCs in India (AARCI), fresh ARC acquisitions rose to Rs 6,721 crore in the September quarter, compared to Rs 4,388 crore in the previous quarter.</span></p> <p><span style="font-size:14px">Retail loan acquisitions nearly doubled to Rs 3,118 crore, up from Rs 1,703 crore, reflecting a shift in the composition of distressed assets, as reported by the Times of India.</span></p> <p><span style="font-size:14px">Over the past decade, personal loans have expanded by 398 per cent (March 2015 March 2025), while industrial credit grew only 48 per cent, indicating a structural change in Indias credit mix.</span></p> <p><span style="font-size:14px">According to Hari Hara Mishra, CEO, AARCI, competitive pressures and investor scrutiny are driving banks and NBFCs, particularly listed entities, to expedite the sale of non-performing assets (NPAs).</span></p> <p><span style="font-size:14px">Sale to ARCs results in quick exit and a healthier balance sheet, vis-&agrave;-vis indefinite wait for realisation through prolonged litigation, Mishra said, noting that lenders increasingly view ARC sales as a practical and effective resolution tool when valuations align.</span></p> <p><span style="font-size:14px">Analysts say the uptick signals a behavioural shift among financial institutions, as they prioritise operational efficiency and market perception over long-drawn recovery processes. </span></p> <p><span style="font-size:14px">While a full-fledged revival of the ARC sector may take time, the latest data indicates indicating cautious optimism in Indias evolving bad loan ecosystem.</span></p> <p><span style="font-size:14px"><em><strong>(KNN Bureau)</strong></em></span></p> 44030 https://knnindia.co.in/news/newsdetails/sectors/rbis-impending-expected-credit-loss-framework-drives-arc-acquisitions 2025-11-11 15:31:29 knnindia.co.in