The Indian Banks’ Association (IBA) has submitted its application to the Reserve Bank of India (RBI) seeking a license to establish Rs 6,000-crore National Asset Reconstruction Company Ltd (NARCL) or a bad bank, according to sources. NARCL was filed last month in Mumbai following registration with the Registrar of Companies (RoC).
According to sources, the company after raising the initial $ 100 and accomplishing other legal matters is approaching the RBI seeking a license to run a rebuilding business. The RBI in 2017, increased the required amount of $ 100 from the previous level of Rs 2 crore, recalling the high amount of money required to buy a bad loan.
The RBI has a process and licensing process for the business, sources said, adding that it could take up to a few weeks to get a license from the regulator. RBI approval may come in September or October, sources said.
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AZB & Partners Legal Adviser has been consulted with them to seek various legal recognition and to implement other legal procedures. The IBA, tasked with establishing the wrong bank, has replaced the first NARCL board. The company has hired P M Nair, a depressed asset specialist from the State Bank of India (SBI), as the managing director.
Other directors on the board are IBA Chief Executive Officer Sunil Mehta, SBI Deputy Chief Executive Officer S Nair and Canara Bank General Manager Ajit Krishnan Nair. Finance Minister Nirmala Sitharaman in the 2021-22 budget, has announced that the high level of public sector banks’ supply of fixed assets requires ways to clean up bank accounts.
“Asset Reconstruction Company Limited and Asset Management Company will be formed to consolidate and take on existing debt,” he said in a Budget Speech statement. It will manage and dispose of assets to other investment funds and to other investors who may face subsequent acquisition of value, he said. Last year, the IBA proposed the creation of an improper bank to quickly resolve ineffective assets. The government accepted the proposal and decided to seek a reconstruction company and an asset management model in this regard.
Meanwhile, state-run Canara Bank has announced its intention to become a leading sponsor of NARCL with a 12 percent share. The proposed NARCL will be 51% of PSBs and the rest will be private lenders.
NARCL will take out a bad loan targeted at lenders. The leading bank entrusted to NARCL will go to the ‘Swiss Challenge’, where other asset recruiting players will be invited to upgrade the offer by the selected buyer to get the highest value of unused goods for sale. The company will collect those 100 percent of the goods provided by lenders. Banks have identified about 22 bad loans worth Rs 89,000 crore to transfer to NARCL in initia
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