The Indian Bank’s Association(IBA) is in the process of filing an application with the RBI, seeking permission for establishing the National Asset Reconstruction Company Limited (NARCL), according to a report by news agency PTI. The NARCL or the bad bank would be started with an initial capital base of Rs 100 crore, in accordance with the regulator’s guidelines. The Registrar of Companies has already given a license to the asset reconstruction company.
Notably, the decision of setting up a bad bank that would take over the stressed assets of the banks was announced by Finance Minister Nirmala Sitharaman in her union budget 2021-22 speech. Sources told PTI that currently, the process of raising the initial capital of Rs 100 crore was ongoing. This would be followed by an audit and then the banking regulator’s license would be sought.
The corporate law firm, AZB & Partners has been hired to provide legal and regulatory support for the process.
PTI further reported that the initial capital would be provided by 8 banks and that the capital base would be expanded to Rs 6,000 crore after NARCL receives a license from RBI. The RBI had in 2017, increased the capital required for asset reconstruction companies from 2 crores to 100 crores.
The public sector banks will have a 51 per cent stake in the NARCL will be remaining investment would come from private banks. The IBA has decided to appoint SBI banker PM Nair as the company’s managing director(MD). A board has also been formed which includes prominent bankers like SS Nair, Sunil Mehta, Ajit Krishnan Nair among others.
