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Private asset reconstruction companies' AUM to decline by up to 6% in FY26: Crisil
Jul-11-2025

Domestic ratings agency Crisil has said that private asset reconstruction companies' assets under management (AUM), measured in terms of security receipts, is set to decline by up to 6 per cent in FY26 to Rs 1.05 lakh crore as redemptions are outpacing acquisitions. It said this is on top of a 15 per cent decline in the AUM in FY25, pitching for a slew of changes that such entities need to adopt going forward. It also said business model realignment is imperative in a dynamic regulatory landscape.

According to the report, competition from government-supported National Asset Reconstruction Company (NARCL), which works on a guarantee-backed model, dents the competitiveness of private ARCs. It said that proposed regulatory changes under which securitisation of retail non-performing assets will be allowed, make it more challenging. With the securitisation of NPAs potentially disrupting the industry's status quo, ARCs may have to seek alternative opportunities to drive growth and profitability. With the Reserve Bank of India's (RBI) draft guidelines of April 2025 providing a framework for this new product, ARCs must prepare to pivot and adapt to a rapidly changing landscape.

The agency's suggestions come amid reports of several private ARCs either winding down or shutting operations in the country. It said acquisitions by private ARCs will remain subdued in FY26. It noted that SRs (security receipts) issued last fiscal had already reduced 29 per cent to Rs 22,000 crore from Rs 31,000 crore in FY24. It added that the decline in corporate NPAs led to slower addition of available opportunities, but there exists a large stock of NPAs on bank books, and this is where the competition by the state-run NARCL hurts private ARCs.  


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