Archive · 16 Jun 2025
RBI Plans Expand Stressed Asset Securitisation
Imagine banks selling troubled loans to other investors.
Right now, this mostly happens through companies called ARCs.
The RBI is making new rules to let more people buy and sell these loans directly.
ARCs, who are good at managing these loans, are likely to be hired by the new investors to help them get their money back.
This change should make it easier to deal with bad loans, which helps banks and the economy.
RBI plans to allow securitisation of stressed assets, expanding beyond the ARC route.
ARCs are expected to be preferred as Resolution Managers for stressed assets under securitisation.
The draft Directions on Securitisation of Stressed Assets were issued in April 2025.
Securitisation of stressed assets aims to deepen the distressed debt market and improve risk management.
ARCs may face increased competition in the retail and MSME sectors.
- Who
- RBI, Asset Reconstruction Companies (ARCs), and investors.
- What
- RBI is expanding the securitization of stressed assets, allowing more market participants.
- When
- April 2025 (draft Directions on Securitisation of Stressed Assets).
- Where
- N/A
- Why
- To provide a market-based mechanism for managing credit risk and to develop a secondary loan market.
Arguments for Securitization
Arguments for ARC Route
Impact of Securitization
Arguments for Securitization
More market mechanisms will allow quick churning of stressed assets.
Arguments for ARC Route
Increase the depth of distressed debt market and improve risk management.
- Key Regulatory Body
- RBI
- Focus
- Stressed Asset Securitisation
- Preferred Role for ARCs
- Resolution Managers
- Targeted Sector
- Retail and MSME
- Experience of ARCs
- 20 years
Sources
Cumulative recovery rate of security receipts issued by ARCs will increase to 36-38% in FY26: Crisil
Debt recovery in stressed realty projects to rise 16% in 2025-26: Report
Real Estate Projects: Asset Reconstruction Company's Cumulative Recovery Rate Of Security Receipts See 16% Increase To 38%, Says CRISIL