Mumbai: The country’s oldest bad loan company, IPO-bound Arcil (Asset Reconstruction Company of India) , gives an insight into the future of loan recovery for retail loans in its offer document filed with Sebi.The company has said it is setting up a digital platform that will allow defaulting retail borrowers to submit settlement offers and receive instant acceptance, eliminating the need for manual intervention. With a shrinking pool of corporate NPAs, Arcil is pivoting towards technology-driven retail loan recovery as its promoters look to sell a third of the company through an IPO.The shift marks a strategic overhaul for Arcil, which was set up in 2002 to clean up banks’ balance sheets by acquiring large stressed corporate loans. According to its draft red herring prospectus (DRHP), Arcil also plans to pilot its recovery infrastructure as a service for banks managing overdue retail loans. If successful, this could create a fee-based revenue stream and reduce its dependence on acquiring bad assets.The company also now sees greater opportunity in retail and SME loans, where defaults are rising. Retail loan stress has grown from Rs 3.5 lakh crore in FY20 to nearly Rs 6.9 lakh crore in FY25, at a CAGR of 14.8%.To tap this market, Arcil is expanding its footprint in semi-urban and rural areas, where most of the stress is concentrated. It is in discussions with small finance banks and NBFC-MFIs to acquire retail and SME loan portfolios. At the same time, it is deploying data analytics and geo-tracking of field agents to improve recovery efficiency, while offering QR code-based and UPI payment solutions to defaulting borrowers.The company is not exiting the corporate segment entirely. It will continue to target mid-sized stressed accounts, particularly in commercial real estate, where resolution timelines are shorter. However, its overall corporate recovery pipeline has thinned, with corporate stress in banks and NBFCs falling to Rs 6.5 lakh crore in FY24, down from Rs 6.9 lakh crore in FY22. Arcil has filed draft papers for an IPO comprising a 100% offer for sale.
