The business of asset recon-
struction seems to be in the
boom, as the net Non-Performing Assets (NPAs) in the
domestic banking industry rose from Rs. 20,280 cr in 2006-07 to
Rs. 24,742 cr in 2007-08. This, in turn, provides an opportunity
to Asset Reconstruction Companies (ARCs) to hunt and work for
bad loans. A couple of months ago, Kotak Mahindra, a financial
company, had received a license from the Reserve Bank of India
(RBI). Another broking firm, Edelweiss, too formed an ARC. The trend
appears to be that the Indian financial markets are attracting
more players towards the market for bad loans. Even analysts working
on banking and economy predict that, in the age of slowdown and
almost recession-like situation, an increase in the chance of
non-repayment and slippages may turn some of the good loans to bad ones.
The latest one to emerge in the pack of ARCs is JM Financial
during September 2008, when it received license from the RBI.
This is the 10th ARC approved by the RBI. ARCs that are already
registered with the RBI include, ARCIL, International Asset
Reconstruction Company, Pegasus, Dhir & Dhir, Kotak
Mahindra ARC, UTI-promoted ASREC, IFCI-promoted ACE, ADA
Group-promoted Reliance ARC and Pridhvi Asset Reconstruction
and Securitization Company. |
