NEW DELHI: The new bad bank is likely to be launched later this week with all the regulatory approvals in place.
According to sources aware of the development, the Indian Banks Association (IBA) has already filed an application with the Registrar of Companies at the Ministry of Corporate Affairs to incorporate the National Asset Reconstruction Company Ltd and its debt management company.
India Debt Management Company Ltd (IDMCL). The proposal is also expected also get a green signal from the Cabinet by end of June or early July, the sources added.
“We are expecting everything to be put in place by June 30 and from July 1 onwards things will start functioning,” said a senior banker in the know.
Lenders have so far reviewed 101 non-performing assets (NPAs) in the first phase and now plan to transfer 22 accounts amounting to roughly Rs 89,000 crore to the bad bank.
These include names like Videocon’s VOVL (Rs 22,532 crore total exposure), Reliance Naval and Engineering Limited (Rs 8,934 crore), Amtek Auto (Rs 9,014 crore), Jaypee Infratech (Rs 7,950 crore), Castex Technologies (Rs 6,337 crore), GTL Limited (Rs 4,866 crore), Visa Steel (Rs 3,394 crore), and others.
Among banks, for instance, state-run Punjab National Bank (PNB) said that it has identified NPAs of Rs 8,000 crore to be transferred to NARCL.
The bad bank will pay up to 15 per cent of the agreed value for the loans in cash and the remaining 85 per cent would be government-guaranteed security receipts.
The government guarantee would be invoked if there is loss against the threshold value.
The government is expected to provide a guarantee of Rs 31,000 crore for a period of five years for the NARCL. Public sector banks, led by Canara Bank, together are expected to pick up a 51 per cent stake in the bad bank.
In an exchange filing earlier, the state-owned Canara Bank said its board had given in-principle approval to be the lead sponsor of the bad bank, with a 12 per cent stake in the entity.
Canara Bank has sought the RBI’s approval for the same.
Rs 89,000 crore to be transferred to bad bank.
Rs 31,000 crore government guarantee on bad loans.