SIDBI actively looking at exiting ARC biz: Chairman
₹400-500 crore, with SIDBI holding a nearly 86% stake. It is billed as the country's first ARC supported by a large number of public sector banks and undertakings, focused on NPA resolution of the MSME sector. In 2022, Press Trust of India reported that Union bank of India had sold its 8% stake in ISARC in favour of Dhansamridhi Finance.
Other sponsors of the ARC include Bank of Baroda, Punjab National Bank, and SIDBI Venture Capital Ltd. The ARC sector in India has seen a churn with large players like Blackstone looking to sell their controlling interest in the ARC business. Arcion Revitalization, originally promoted by Apollo Global and ICICI bank, gave up its licence last year.
Earlier, Lonestar surrendered its ARC licence and KKR abandoned plans to establish an ARC. Stringent capital requirements have made it difficult for ARCs to function. The Reserve Bank of India had increased the capital requirement for ARCs to ₹100 crore from ₹2 crore.
This, too, has been raised to ₹300 crore by 2026. Ramann said SIDBI is currently focussed on increased direct lending to the micro, small and medium enterprises (MSMEs) by eyeing a 25% share in the banking system's total lending. SIDBI's current share in bank lending stands at 17%.
Earlier, the development finance institution had been in preliminary discussion with both the RBI and the government over plans to convert itself into an SME digital bank. But the talks didn't make much headway. “The future is about focussed digi-bank.
SIDBI has a better risk assessment and underwriting. We are looking at going more digital, said Raman. SIDBI is also looking to raise capital through a rights issue of ₹10,000 crore in the next financial year to expand its equity capital as it expects to
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