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The report by Crisil Ratings, which was released at an Assocham seminar on ARCs/stressed assets, the Asset Reconstruction Companies (ARCs) sector is expecting to notch up reasonable growth in Assets Under Management (AUM) and may cross the Rs 10 lakh-crore-mark this fiscal (FY24), up from Rs 8.48 lakh crore a year ago. According to the report, the sector must now look to consolidate as the Non-Performing Assets (NPA) problem has been ‘well contained’.

It said the book value of bad loan sales to ARCs is likely to cross the Rs 10 lakh crore-mark by next month from Rs 8.48 lakh crore in March 2023. The sector's growth rate is likely to moderate further to 5-6 per cent next fiscal due to the cyclically low NPAs in banks and NBFCs. But despite the rapid decline in NPAs, there are opportunities for ARCs as the bad assets in retail books of banks and non-banks spike.

The report further noted that the growing stress in retail loans/small and medium enterprise segments provides opportunity for ARCs to diversify their business from the corporate segment to retail and SMEs. ARCs came into the picture in 2003 with a handful of players but there are 27 players in the industry now.