Lenders have identified 22 stress accounts, worth approximately Rs 89,000 crores, to be transferred to the proposed National Asset Reconstruction Company (NARCL) in the first phase. A much larger exposition is expected to be rescheduled over time – approximately Rs 2 million.
The chairman of the Association of Indian Banks (IBA) Raikiran Rai Ji said that the banks have identified the accounts that can be received by ARC in the first phase and have come to that number. “However, once the ARC is formed, the management will consider these assets and only if it considers it worth it, will make an offer,” said Rai.
Paradise, who is also a M.D. and CEO Union Bank of India, said that out of the total, Union Bank had determined that problem loans of Rs 7,800 crore would be sent to NARCL. The lender will also receive a 9% stake in the asset reconstruction company. Similarly, National Bank of Punjab (PNB) MD and SS CEO Mullikarjun Rao said Saturday that the lender has identified an NPA of Rs 8,000 crore to be sent to NARCL.
“We’ve done some preliminary work to set the stage so that it can take off quickly after registering with ARC,” Rye said. Identified accounts are those where reserve coverage is almost 100% and the exposure exceeds Rs 500 crore. The government’s plan, outlined in the 21-22 union budget, is to create an ARC and an AMC to take over and resolve problem loans.
Rai said the Indian Banks Association (IBA) has asked leading banks to convene meetings and keep an endorsement ready so that once the ARC is formed, they can start the process. Care ratings it was previously said that following the completion of the Rs 2 million crore transfer, the revised gross bad loans ratio could be around the same level prior to the asset quality audit conducted by the Reserve Bank of IndiaRBI) in 2015.