ARCs' Recovery Rates Surge: A Beacon of Hope for Stressed Assets

The recovery rates of security receipts for asset reconstruction companies are set to increase significantly by 2026, driven by strong performance in the infrastructure sector. Factors include the resilience of stressed assets in real estate and thermal power, as well as regulatory changes supporting ARCs.

The cumulative recovery rate of security receipts for asset reconstruction companies is poised for a significant increase, marking the second consecutive year of improvement, a recent report stated on Thursday.

Crisil's report anticipates a yearly lift in recovery rates of up to 15 percentage points, potentially reaching 75-80% by the fiscal year 2026. The uptick is attributed to robust performances in critical infrastructure sectors.

Driving these enhancements are more effective management of stressed assets in real estate, thermal power, and roads, alongside regulatory shifts that have bolstered asset reconstruction companies' abilities to navigate troubled waters.

(With inputs from agencies.)