Global Economy
The global economy remained resilient during 2025–26 despite persistent trade and geopolitical uncertainties. Growth was supported by technology-led investment, fiscal and monetary support and relatively favourable financial conditions, while global inflation moderated. However, geopolitical tensions, trade policy uncertainties, fiscal vulnerabilities and financial market volatility continued to weigh on the outlook. The escalation of the West Asia conflict towards the end of the year further heightened risks relating to energy prices, inflation and supply chains.
Indian Economy
The Indian economy remained resilient during 2025–26, supported by steady domestic consumption, sustained investment and sound macroeconomic fundamentals. Buoyant services activity, improving industrial momentum and robust agricultural production supported growth, while softer commodity prices contributed to moderation in headline inflation.
Financial markets remained cautious amid global volatility. The Government continued its focus on fiscal consolidation and capital expenditure, while the external sector remained stable, supported by adequate foreign exchange reserves and a moderate current account deficit. Healthy corporate and banking sector balance sheets, strong domestic demand and continued policy support provide a positive foundation for growth, although geopolitical, trade, energy price and weather-related risks remain key near-term challenges.
Industry Outlook
The asset reconstruction industry remains closely linked to the asset quality of banks and financial institutions. The sector continued to benefit from improving banking sector fundamentals, although the moderation in fresh stressed assets has impacted the supply of new assets for acquisition to some extent.
As per the Reserve Bank of India’s Monetary Policy Report – April 2026, the GNPA ratio of Scheduled Commercial Banks declined to 2.0% in December 2025 from 2.5% a year earlier, reflecting broad-based improvement in asset quality. At the same time, sustained credit growth, selective sectoral stress and continued balance sheet clean- up by banks and financial institutions are expected to provide opportunities for ARCs.
The ARC sector witnessed continued activity in asset acquisition, resolution and SR redemption. As per the Association of ARCs in India, cumulative dues acquired by ARCs increased from ₹16,88,091 crore in September 2025 to ₹17,57,422 crore in December 2025, reflecting sustained sector activity. Corporate and large-ticket stressed assets, particularly across real estate, infrastructure and other leveraged sectors, continue to provide opportunities for structured resolution through the IBC, SARFAESI Act, restructuring and negotiated settlements.
The evolving regulatory framework, coupled with greater adoption of technology, data analytics and improved monitoring, is expected to strengthen asset evaluation and resolution efficiency.
The outlook for the asset reconstruction industry remains cautiously positive. While improving asset quality may moderate the supply of fresh stressed assets, selective stress across sectors and continued balance sheet clean-up are expected to create acquisition opportunities for well-capitalised and specialised ARCs.
ARCs are well positioned to leverage their expertise in asset evaluation, restructuring, enforcement and resolution to drive value-maximising recoveries and SR redemptions. Disciplined asset selection, robust due diligence, prudent investment and timely resolution will remain key to sustainable growth amid evolving regulatory and macroeconomic conditions.