ICAs signed for all assets going to NARCL in first tranche: SBI

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October 01, 2021 8:18 AM

In terms of the shareholding of NARCL, private-sector banks have come forward and they are in the process of obtaining the requisite approvals in order to invest in the entity, Khara said.

Dinesh KharaState Bank of India (SBI) chairman Dinesh Khara

Inter-creditor agreements (ICAs) for all the assets identified for transfer to the National Asset Reconstruction Company (NARCL) in the first round have been signed, State Bank of India (SBI) chairman Dinesh Khara told FE in an interview.

In terms of the shareholding of NARCL, private-sector banks have come forward and they are in the process of obtaining the requisite approvals in order to invest in the entity, Khara said.

“So they are fully on board and in all those accounts where ICAs have been signed, there is a consensus among banks that all such accounts will move into NARCL,” Khara said, adding that irrespective of ownership, assets would get aggregated. “All those who have signed ICAs would be happy to have the assets aggregated and move them towards resolution,” he said.

An ICA is an agreement signed between the lenders to a company as a sign of their commitment to ensure a common resolution of the stress built up in that company.

The NARCL has been set up with a paid-up capital of Rs 149 crore, all of which has come from eight public-sector banks. Banks are understood to have identified 22 accounts with a total outstanding of Rs 89,000 crore for transfer to the NARCL in the first tranche. Eventually, the bad bank is expected to acquire assets worth Rs 2 lakh crore from lenders. Sector analysts say that the aggregation of the exposures of several lenders is the chief advantage of the NARCL.

“The chances of resolution improve when you club together all the piecemeal exposures of each bank into a single asset. The assets identified in the first tranche are very old ones where private banks have anyway made an exit. So aggregation shouldn’t face too many challenges,” said an analyst.

“One of the challenges for resolution was that each bank had a different kind of charge attached to the same asset. Aggregation through the NARCL takes care of that problem,” said Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services (APAS). “We must hope now that the NARCL is steered competently by the management so that there is actual resolution of stress,” he added.

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