Arcil settles 115 cases, pays Rs 832 cr to banks

The Asset Reconstruction Company of India (Arcil) resolved 115 non-performing assets (NPA) cases aggregating Rs 4,602 crore during 2005-06 (April-March), said the company.

"Of the amount resolved, Arcil recovered and distributed Rs 832 crore to the banks," said Rajendra Kakker, managing director and chief executive office.

"The remainder, we expect to realise and distribute over three to four years," he said.

Arcil acquires and resolves banks' non-performing assets cases, which are loans extended to companies that have turned bad, on account of non-repayment.

Banks sell such loans to reconstruction companies, if they have failed to recover the dues themselves. Asset reconstruction companies buy these loans at discounted price from banks and issue security receipts to the banks.

The accounts are then resolved through focused management by way of recoveries, sale of assets, restructuring of the company, or sale of parts of the company through auctions.

The security receipts are redeemed once the asset reconstruction company has resolved the account and recovered the money. This can take one to five years.

So far, Arcil is the sole operating asset reconstruction company in the country, even though many others have obtained licences from the Reserve Bank of India. It was promoted by State Bank of India, ICICI Bank, Industrial Development Bank of India Ltd, and Punjab National Bank.