A Systematic Review and Bibliometric Analysis of Asset Reconstruction Companies: A Panacea or A Plight for Non-Performing Assets

Abstract

ARCs (asset reconstruction companies) are specialised financial institutions that acquire impaired assets from banks at discounted values and attempt to recover them, enabling banks to achieve balance sheet stability. The present study provides a comprehensive examination of the ARCs’ role within India’s financial landscape, highlighting their contributions, challenges, and potential for improvement. Through an extensive systematic literature review and a conceptual analysis, the paper identifies critical aspects of the ARC framework, including its strengths and weaknesses. The findings reveal that while ARCs have made notable strides in enhancing the insolvency resolution process and supporting economic revival, they face several challenges that hinder their effectiveness. These include regulatory ambiguities, operational inefficiencies, and capital constraints, among others. The study underscores the need for a re-evaluation of the ARC structure, suggesting that a more robust regulatory framework, coupled with better funding mechanisms and streamlined operations, could significantly enhance their performance. Policymakers and regulators should consider revisiting and refining the ARC model to address these challenges. By fostering a more conducive environment for ARCs—through clearer regulations, stronger financial support, and enhanced operational capabilities—India can establish a more efficient and effective asset resolution system. Such reforms would not only bolster the performance of ARCs but also contribute to the broader objective of building a resilient and responsive insolvency resolution ecosystem. The study suggests that these improvements could attract well-funded and strategically designed firms into the Indian asset resolution market, further strengthening the country’s capacity to manage and resolve non-performing assets in a timely and impactful manner.