“Happy to share that #RBI has granted license to #NARCL on 4.10.2021. Approved under Section 3 of the #SARFAESI Act 2002,” tweeted Indian Banks Association CEO Sunil Mehta
Reserve Bank of India (RBI) on 4 October License to National Asset Reconstruction Company Limited for ₹6,000 crore. (NARCL), a move that will help kickstart operation of bad bank.
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narco was incorporated in July in Mumbai after registration with the Registrar of Companies (ROC).
“Happy to share that #RBI has granted license to #NARCL on 4.10.2021. Approval has been granted under Section 3 of the #SARFAESI Act 2002,” tweeted Indian Banks Association (IBA) CEO Sunil Mehta.
IBA has been entrusted with the task of setting up a bad bankhas put up a preparatory board for NARCL.
The company has appointed stressed assets expert PM Nair of State Bank of India (SBI) as Managing Director.
Other directors on the board are IBA CEO Mehta, SBI Deputy Managing Director SS Nair and Canara Bank Chief General Manager Ajit Krishnan Nair.
Finance Minister Nirmala Sitharaman had said in the budget for 2021-22: That there is a need for measures to clean up the bank books for higher level provisioning of their stressed assets by the public sector banks.
Read also | India needs many bad banks to clean up lenders’ balance sheets, get credit growth back: CII
“An Asset Reconstruction Company Limited and Asset Management Company will be set up to consolidate and handle the existing stressed debt,” he had said in the budget speech.
It had said it would manage and dispose of the assets to alternative investment funds and other potential investors, so that the final value could be realized.
Last month, the cabinet approved a proposal to provide government guarantee of Rs 30,600 crore for security receipts issued by NARCL.
NARCL will pay 15% of the agreed value for bad loans in cash and the remaining 85% will be security receipts guaranteed by the government.
It will be 51% owned by PSBs and the rest with private sector lenders.
Last week, SBI, Union Bank of India, Indian Bank took 13.27% stake each in NARCL, while Punjab National Bank grabbed around 12%.
Read also | Banks’ NPAs come down to ₹8.08 lakh crore in September 2020: Government
NARCL will take over the identified bad loans of the lenders.
The lead bank with a proposal in hand of NARCL will go for the ‘Swiss Challenge’ to improve the offer made by a chosen bidder to find a higher valuation of a non-performing asset on sale to other asset reconstruction players. will be invited. .
The company will take up the assets which are 100% provided by the lenders. Banks have identified around 22 bad loans worth ₹90,000 crore to be transferred to NARCL in the initial phase.
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