ARC Securities Receipt Recovery Rate Potential to Increase by 60% due to Retail Boom

Securities receipt recovery rates for asset reconstruction companies (ARCs) are expected to improve from 5-7% to up to 60% in the next financial year due to accelerated recovery due to increased cash transactions, higher retail lending and improved quality assets. , Crisil said.

Crisil’s rate of cash conversion at Rs. 30,000 crore model SR portfolio increased from 36% to 40% in FY 22. This trend is expected to continue.

“Another reason for the increase in recovery is that ARC’s participation in the retail sector is likely to more than double to 15-18 per cent in the next fiscal,” said Sushant Sarode, Director, CRISIL Ratings. “This is beneficial as the recovery of the retail pool begins within a few months of the acquisition, accelerating the cumulative recovery. On the other hand, recovery of corporate assets depends on the resolution strategy and can take up to five to eight years.”