Q.1 What does Arms do?


Arms’ parent company Arcil is engaged in the acquisition and resolution of corporate and mid-cap segment of Non-Performing Loans (NPLs). With the growth in retail/consumer NPLs, this segment also becomes a natural extension of our business activity. Arms was formed to address this segment.


Arms’ core strength for retail and consumer loan default resolution is derived from its lineage, which gives it a platform to launch a scalable and robust business model. Our sponsors account for more than half of India’s banking landscape. We believe that Arms can play a significant role in organising this industry and setting the best-practice benchmarks for others to follow.


Q.2 Why is a responsible borrowing culture necessary for India?


Borrowing enables faster growth for the economy, but this can be achieved only with responsible repayment. The fallout of a high default rate due to irresponsible borrowing, becomes very expensive for any society. Retail borrowing culture is new to India and as such, we need to inculcate responsibility in this respect in the minds of people.

As a responsible citizen, the borrower should be keen to correct the default and be willing to co-operate to find a solution. He/she also needs to be honest in disclosing his/her financial position in detail to aid the process. This is how the borrower can play a positive role in building a new culture.


Q.3 What will be the borrower’s role?


The borrower needs to understand that borrowing enables faster growth; but this can be achieved only with responsible behaviour. The fallout of a higher default rate with irresponsible borrowing in any society will only make borrowing expensive and difficult, which is counterproductive to growth. Therefore, he or she needs to be keen to address the default, willing to assume responsibility for the situation, and willing to cooperate to find a solution. He or she also needs to be honest in disclosing his or her financial position to us in detail to justify the resolution approach.


Q.4 How will your loan recovery solutions help bring about a responsible borrowing culture?


Our trained counselors place before the borrower his/her responsibility in paying back the bank loan. This is done humanely by making him/her aware that borrowing necessarily carries with it the responsibility to repay. He/she is also made aware that it is always prudent to borrow only as much as it is possible for him/her to repay. After the borrower’s difficulties are taken into account, a fair repayment solution is arrived at.

The borrower now realises that not only is it necessary to repay the loan, but it is also possible to do so by some adjustments to his/her lifestyle. It brings about a change in his/her perspective. He/she gets a chance to start life afresh. This is what brings about a responsible borrowing culture.



Q.5 How are your counselors different from recovery agents?


Recovery agents usually recover money upfront and settle or foreclose the loan with the borrower. Our Resolution Counsellors take into account the borrower’s perspective, and make all efforts to find a solution to the borrower’s inability to repay the debt. Of course, the borrower needs to realize the dimension of the problem and be willing to co-operate with our resolution counsellors. In case the borrower is unwilling to cooperate or not interested in repaying the loan, we will resort to legal measures.



Q,6 Are all counselors your employees or do you hire third-party services too?


All counselors are recruited and trained by us, whether they are our direct employees or are on the rolls of our service providers.


Q.7 Does your process differ from what others have been doing in terms of loan defaults, like attaching property and other similar measures?


Generally the others’ approach to default would be settlement or loan foreclosure with the borrower, by attaching his/her property.

Our process differs from others because we provide a number of suitable options. These may include structured repayment schedules, settlement or an alternative arrangement based on specific problem in deserving cases. We may even resort to loan foreclosure by selling the collaterals with the borrower’s co-operation.

However, difficult borrowers are handled in accordance with the law of the land. This could include taking possession of the secured or mortgaged assets under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, 2002.


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