Mumbai, Jan 28 (PTI) The National Asset Reconstruction Company (NARCL) or bad bank has received all approvals to commence operations, and a total of 38 NPA accounts worth Rs 82,845 crore have been identified to be transferred to NARCL initially, State Bank of India Chairman Dinesh Khara said on Friday.
The transfer of 38 stressed accounts will happen in a phased manner, with banks agreeing to transfer 15 NPA accounts worth Rs 50,000 crore in the first phase by March 2022, Khara said.
“In the phase one, about 15 (stressed) accounts aggregating to Rs 50,000 crore are expected to be transferred to the NARCL. We are trying to have these accounts transferred within this financial year after completing all the required processes,” Khara told reporters.
He said India Debt Resolution Company Ltd (IDRCL), which will manage the stressed assets and engage market professionals and turnaround experts, has also received all the requisite regulatory approvals.
Finance Minister Nirmala Sitharaman in her Budget 2021-22 speech had announced that the government intends to set up a bad bank as part of the resolution of bad loans worth about Rs 2 lakh crore in the banking system.
When asked about the lower stressed asset pool as compared to the initial amount, SBI’s Managing Director (stressed assets resolution group) J Swaminathan said Rs 2 lakh crore was the universe that was identified earlier and a few accounts have got resolved during this period of one year.
He said the Rs 83,000 crore worth of stressed accounts are where the joint lending forums (JLF) have met and taken a decision to transfer to the NARCL.
“For the remaining accounts, this process is still on in a phased manner and this will happen over the next year. Currently, the target is to transfer at least the initial set of 15 accounts aggregating to Rs 50,000 crore,” Swaminathan explained.
Khara said while public sector banks have taken a majority stake in NARCL, IDRCL will be majorly owned by private sector banks.
SBI, Union Bank of India and Indian Bank have picked up 13.27 per cent stake each in NARCL. Punjab National Bank has also acquired close to 12 per cent stake in the bad bank.
He said both the companies have their respective boards in place. While NARCL will be managed by Padma Kumar Nair, IDRCL will be headed by Manish Makharia.
Explaining the arrangement, Khara said that NARCL will acquire and aggregate the identified NPA accounts from the banks, while the IDRCL, under an exclusive arrangement, will handle the debt resolution process.
This exclusive arrangement will be as per the scope defined in the debt management agreement being executed between the two entities, he said.
The arrangement will be on principal-agent basis and final approval and ownership for the resolution will lie with the NARCL as the principal.
IDRCL is expected to bring in superior resolution techniques, preserve the value and showcase the brownfield assets and attract domestic as well as foreign investors and also the AIFs, Khara said.
“This will maximise value for all stakeholders. It is also expected to free the bandwidth as well as capital for the lending bankers, which can be put to more gainful use,” he said.
NARCL will try to identify and acquire assets on a 15:85 cash and SR security receipts (SRs).
There SRs will be issued in favour of the transferring lenders and will be secured by a unique government guarantee for its face value, he said.
In September last year, the government had announced to provide guarantee worth Rs 30,600 crore to security receipts issued by NARCL. The guarantee is valid for five years.
Swaminathan further said post the transfer of stressed assets from the banks to NARCL, an account-level trust will be formed for each account and the debt resolution will be handled by IDRCL. PTI HV MKJ
