Asset reconstruction companies, banks differ on cleaning up bad debts mess

India’s nearly Rs 10-trillion bad debt market has another problem. Asset Reconstruction Companies (ARCs), key players in the distressed assets markets, cannot agree with banks on how to go about resolving the bad debt mess.

Banks want to dispose of the assets at a deep discount, but for upfront payments. The deep discount works in favour of ARCs too, only if they had the cash.

Instead, the ARCs are requesting banks to go for the security receipts (SR) route, in which the ARCs put a minimum of 15 per cent of the value upfront, and the rest they manage to