NEW DELHI: The much-awaited bad bank — National Asset Reconstruction Company (NARCL) — which has been incorporated with the Ministry of Corporate Affairs will see a cumulative equity capital infusion of Rs 6,000 crore from at least 15 lenders, both public and private. The new bad bank is likely to be operational later this year with all the necessary regulatory approvals in place.
“Now that NARCL has been incorporated, we will now file an application with the Reserve Bank seeking an ARC licence. Also, the proposal is before the Cabinet and its nod is expected to come later this month or early next. Total capital requirement for the bank is not expected to exceed Rs 6,000 crore and at least 15 banks are keen to infuse funds,” said a person aware of the matter.
While NARCL has been incorporated as of July 7, 2021, the India Debt Management Company Limited (IDMCL) which will manage these bad loans is yet to become a legal entity. According to filings with the Registrar of Companies (RoC), the bad bank will be headed by Padmakumar Madhavan Nair, a stressed assets expert from State Bank of India (SBI), as the managing director.
The other directors will include Indian Banks’ Association (IBA) chief executive Sunil Mehta, SBI deputy managing director Salee Sukumaran Nair and Canara Bank’s representative Ajit Krishnan Nair. The existing regulations mandate an ARC to have at least one sponsor.
Sources say public sector banks, led by Canara Bank, together are expected to pick up a 51% stake in the bad bank. Earlier in an exchange filing, the state-owned Canara Bank had said its board had given in-principle approval to be the lead sponsor of the bad bank, with a 12% stake in the entity.
On the other hand, private peers such as ICICI Bank, HDFC Bank, Axis Bank as well as IDBI Bank may hold a significant stake in IDMCL, subject to board approvals. Lenders have so far reviewed 101 non-performing assets (NPAs) in the first phase and plan to transfer 22 accounts amounting to Rs 89,000 crore to the bad bank.