|Asset Reconstruction Company India Ltd. (Arcil), a joint holding asset reconstruction company (ARC) of banks and financial institutions in the country has proposer raising capital to infuse it into the nonperforming asset cases. This has come in wake of the rising NPAs and lack of equity capital to support them.
The company founded in 2002 to support the members in asset reconstruction providing professional and monetary requirements. Arcil, is held majorly by State Bank of India (19.95%), IDBI Bank (19.18%), ICICI Bank (13.26%), and Punjab National Bank (10.01%). The company is looking to raise around Rs. 100 crore funds from various investors.
Arcil buys bad loans from the banks at a price, and later recover the loans from the borrowers, the spread in the two forms their earnings. These purchase of bad loans can be made in cash or in form of security reciepts.
In case of SR reciepts, the payment is transferred if and when the ARC retrieves the loan from the concerned accounts.
Arcil's assets under management decreased from Rs. 6,780 crore in June 2011 to Rs. 6000 crore in June 2012. The company's current reserves stand at Rs. 1,300 crore.