NEW DELHI: Bank of India (BoI) has picked up a 9% stake in National Asset Reconstruction Company Limited (NARCL), the asset reconstruction company incorporated to acquire bad loans from commercial banks.
The government-owned BoI said in an exchange filing that it has invested Rs 109 crore in NARCL under preferential share issuance. “As a result of the equity participations, the shareholding of the bank in the company will come to 9.00% of total shareholding of NARCL as on 21 March 2022,” the bank said in the statement.
The bank will acquire 12.68 crore equity shares of Rs 10 each in NARCL, which is also known as bad bank. NARCL is largely owned by public sector banks, which together own 51% in the asset reconstruction company. NARCL acquires bad loans from commercial banks and transfers them to Indian Debt Resolution Company Ltd (IDRCL) for resolution.
State-owned banks -- State Bank of India, Union Bank of India and PNB – together hold close to 30% in NARCL, while Canara Bank is the largest shareholder with 12% stake. NARCL, which got all its regulatory approvals in January this year, was supposed to be operational by now with 15 bad loans accounts amounting to Rs 51,000 to be transferred in the current financial year.
However, the transfer is yet to take place. Announcing the formal launch of the bad bank in January, Dinesh Khara, chairman of State Bank of India, one of the stakeholders in the bad bank, had told the media that a total of 38 accounts aggregating to Rs 82,845 crore have so far been identified for transfer to NARCL.
The banks will receive 15% upfront cash payment against bad loans transferred and the rest in the form of security receipts (SRs) guaranteed by the government of India. The guarantee is for Rs 30,600 crore.