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The Board of Canara Bank has given in-principle approval for participating in the National Asset Reconstruction Company Ltd (NARCL) as a sponsor by taking 12 per cent equity stake.
The Bengaluru-headquartered public sector bank has sought the Reserve Bank of India’s approval for the same, the Bank said in a regulatory filing.
Banks such as State Bank of India, Bank of Baroda, Bank of India and IDBI Bank are expected to take up to 10 per cent stake in NARCL.
Stressed consortium loans (₹500 crore and above) will be transferred to NARCL. Banks have so far identified 22 stressed assets aggregating about ₹89,000 crore for transfer to NARCL.
Overall, stressed loans aggregating up to ₹2 lakh crore are expected to be transferred by Banks to the company.
Padmakumar Madhavan Nair (Chief General Manager with SBI’s Stressed Assets Resolution Group) has been appointed as MD & CEO of NARCL.
In her Union Budget speech on February 1, 2021, Finance Minister Nirmala Sitharaman said that an Asset Reconstruction Company (ARC) and an Asset Management Company (AMC) would be set up to consolidate and take over the existing stressed debt and then manage and dispose of the assets to Alternate Investment Funds and other potential investors for eventual value realisation.
Indian Banks Association (IBA) is the Nodal Agency for constituting the ARC and AMC, designated as National Asset Reconstruction Company Ltd (NARCL) and India Debt Management Company Ltd (IDMCL), respectively.
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