{"id":52842,"date":"2025-08-29T19:17:11","date_gmt":"2025-08-29T13:47:11","guid":{"rendered":"https:\/\/www.antiersolutions.com\/blogs\/?p=52842"},"modified":"2025-09-01T12:50:25","modified_gmt":"2025-09-01T07:20:25","slug":"tokenization-of-security-receipts-issued-by-arcs-in-india-enhancing-liquidity-in-distressed-assets","status":"publish","type":"post","link":"https:\/\/www.antiersolutions.com\/blogs\/tokenization-of-security-receipts-issued-by-arcs-in-india-enhancing-liquidity-in-distressed-assets\/","title":{"rendered":"Tokenization of Security Receipts Issued by ARCs in India: Enhancing Liquidity in Distressed Assets","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"

The Indian banking sector has been under immense pressure from non-performing assets (NPAs), which are valued at more than \u20b910 lakh crore, limiting the banks\u2019 lending capacity and weighing on credit growth.\u00a0<\/span><\/p>\n

To resolve these stressed loans, the <\/span>Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act)<\/a> created Asset Reconstruction Companies. The companies acquire NPAs at discounts and issue Security Receipts (SRs) to investors as consideration.\u00a0<\/span><\/p>\n

While these instruments give investors rights over recoveries from the acquired assets, they remain largely illiquid, with limited secondary market options, limiting portfolio diversification and timely exits for participants.\u00a0<\/span><\/p>\n

Tokenization<\/strong> <\/a>provides a possible shift. By converting SRs into digital tokens, they can be divided into smaller units, traded more efficiently, and monitored with greater transparency. The regulatory backdrop has improved, with SEBI\u2019s February 2025 notification expanding the pool of qualified buyers to all RBI-regulated <\/span>NBFCs and HFCs<\/span><\/a>.<\/span><\/p>\n

This document provides an insight about a <\/span>detailed overview of SR tokenization once the regulatory bodies adopt this through enactment .\u00a0<\/span><\/p>\n

A Visual Journey Of NPAs To Tokenization<\/strong><\/h3>\n

\"Journey<\/p>\n

Understanding Security Receipts Issued by ARCs<\/strong><\/h3>\n

Security Receipts (SRs) are financial instruments issued by ARCs to finance NPA acquisitions from banks. They represent an undivided interest in a pool of distressed assets, granting investors a share of recoveries from loan resolutions, asset sales, or legal actions.<\/span><\/p>\n

\"Lifecycle<\/p>\n

The returns from this are variable, tied to recovery success, offering high-yield potential with inherent risks.<\/span><\/p>\n