Asset Reconstruction Company (India) Limited: 35% AUM past eight years

Asset Reconstruction Company (India) Limited had Rs 7,040.215 crore of assets under management, or AUM, older than eight years at March 31, 2026, equal to 34.94% of Rs 20,149.987 crore total AUM. Reserve Bank of India rules require unredeemed security receipts linked to those assets to be written off by investors, although ARCIL continues recovery activity.

Why is 35% of ARCIL’s AUM past eight years?

ARCIL’s Rs 7,040.215 crore over-eight-year AUM represents stressed assets that remain under resolution after the eight-year period, rather than assets on which collection efforts have stopped. An asset reconstruction company, or ARC, acquires stressed assets from banks and financial institutions, then seeks recovery through settlements, restructuring, enforcement of security interests and legal proceedings. ARCIL had Rs 20,149.987 crore of AUM across its portfolio at March 31, 2026.

The over-eight-year balance was ARCIL’s second-largest ageing category after assets acquired within one year, which amounted to Rs 5,618.480 crore at March 31, 2026. Assets aged more than one year and up to three years were Rs 3,893.328 crore, while those aged more than three years and up to five years were Rs 2,833.897 crore. The category aged more than five years and up to eight years was Rs 764.067 crore.

ARCIL’s own share of the Rs 7,040.215 crore over-eight-year AUM was Rs 760.403 crore at March 31, 2026. Acquisitions are commonly held through trusts that issue security receipts, or SRs, to qualified buyers, which can include banks, financial institutions, insurance companies and other permitted investors. ARCIL must retain the higher of 15% of the transferor’s SR investment or 2.5% of total SRs issued in each class until all SRs are redeemed.

What does the eight-year write-off rule mean for ARCIL investors?

The Reserve Bank of India requires SRs not redeemed within eight years to be treated as loss assets and written off in investors’ books. An SR represents an investor’s interest in a trust holding acquired stressed assets. The requirement is therefore an investor-level accounting treatment, while the trust can continue to pursue recoveries from borrowers and underlying collateral.

ARCIL states that it continues resolution until the entire recovery proceeds are received. ARCIL recovered Rs 365.672 crore from AUM older than eight years in Fiscal 2026, compared with Rs 974.463 crore in Fiscal 2025 and Rs 851.995 crore in Fiscal 2024. The Fiscal 2026 figure confirms that cash recoveries can continue after the write-off threshold, but the decline from the preceding two years shows that recovery activity does not establish the amount or timing of future proceeds.

Recoveries are distributed among SR holders in proportion to their holdings after adjustment for outstanding fees and expenses. ARCIL separately recorded Rs 65.914 crore of recovery of security receipts, unrealised fees and expenses written off earlier in its standalone Fiscal 2026 accounts, against Rs 100.032 crore in Fiscal 2025. That income line covers previously written-off items and is not disclosed as a measure exclusively of recoveries from AUM older than eight years.

Has ARCIL’s aged AUM fallen as its portfolio expanded?

ARCIL’s over-eight-year AUM has fallen in rupee terms while total AUM has expanded, reducing the older pool’s portfolio share. The aged balance declined from Rs 7,299.086 crore at March 31, 2024 to Rs 7,191.985 crore at March 31, 2025 and Rs 7,040.215 crore at March 31, 2026. Total AUM rose over the same period from Rs 15,230.031 crore to Rs 20,149.987 crore.

The older category represented 34.94% of total AUM at March 31, 2026, down from 47.93% at March 31, 2024, based on ARCIL’s disclosed balances. AUM represented by SRs outstanding for less than eight years increased by Rs 5,178.827 crore in the two years to March 31, 2026. Structured acquisitions accounted for Rs 11,242.353 crore, or 85.76%, of that less-than-eight-year AUM at the latest date.

What indicators show the recovery position of ARCIL’s portfolio?

ARCIL’s cumulative SR redemption ratio was 50.78% at March 31, 2026, meaning trusts had redeemed Rs 22,400.027 crore of cumulative SR issuance of Rs 44,114.432 crore. The ratio is calculated as cumulative SRs redeemed divided by cumulative SRs issued. It was 51.79% at March 31, 2025 and 51.31% at March 31, 2024.

Recovery ratings provide an estimate of expected recovery as a percentage of outstanding SR face value, but their usefulness is limited for the oldest pool. Reserve Bank of India guidelines generally require ratings for SRs older than eight years to be withdrawn, except in specified circumstances. Among ARCIL’s outstanding rated AUM at March 31, 2026, 32.83% was rated RR1+ or RR1, indicating expected recovery of at least 100% of face value, and 54.75% was rated RR2, indicating expected recovery of 75% to 100%.

The ageing risk therefore remains dependent on asset-specific execution, even though the aggregate portfolio has added newer AUM. ARCIL operates 487 open trusts out of 706 trusts formed at March 31, 2026; the other 219 trusts had closed after all financial assets were resolved. Open trusts are the vehicles through which continuing collections, expenses and distributions to SR holders are managed.

What could affect ARCIL’s future collections from aged assets?

ARCIL’s recoveries from aged AUM depend on borrower settlements, collateral value and enforceability, and the timing of legal processes. ARCIL uses the Insolvency and Bankruptcy Code, 2016, negotiated settlements, debt restructuring or rescheduling, enforcement under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and proceedings before the Debt Recovery Tribunal. Each route can produce different recovery timing and outcomes.

ARCIL had 206 collection agents, 218 registered valuers and 988 empanelled lawyers at March 31, 2026 to support management of corporate, small and medium enterprise, or SME, and retail portfolios. ARCIL also acquired Rs 5,958.800 crore of stressed assets in Fiscal 2026, compared with Rs 3,975.871 crore in Fiscal 2025 and Rs 2,068.982 crore in Fiscal 2024. New acquisitions can alter the overall ageing mix, but they do not themselves resolve the Rs 7,040.215 crore pool already older than eight years.

ARCIL’s stated strategy is to increase the proportion of retail and SME and other loans in its portfolio. Retail AUM grew to Rs 4,744.761 crore at March 31, 2026 from Rs 1,942.296 crore at March 31, 2024, while corporate loans remained the largest vertical at Rs 13,852.761 crore, or 68.75% of AUM. ARCIL is also discussing pilot arrangements with banks to act as a recovery agent for stressed assets that are not sold to ARCs.

Conclusion

ARCIL’s Rs 7,040.215 crore of AUM older than eight years creates an explicit distinction between investor accounting and continuing asset recovery. Investors must write off unredeemed SRs at the regulatory threshold, but ARCIL recovered Rs 365.672 crore from the aged pool in Fiscal 2026. The balance has declined since March 2024, yet it remained 34.94% of total AUM at March 31, 2026.

The next measures to watch are ARCIL’s disclosed recoveries from the over-eight-year category, the cumulative SR redemption ratio and the number of open trusts resolved. ARCIL’s plans to expand retail and SME acquisitions and pilot bank collection services could increase newer business volumes, while the recovery timing and final proceeds from the older AUM remain unresolved.