PNB to exit ARCIL via 10.1% stake sale | The Financial Express

PNB to exit ARCIL via 10.1% stake sale

The sale process of PNB stake in Asset Reconstruction (ARCIL) is subject to the approval of the RBI, and when completed the bank will cease to be a sponsor of ARCIL.

PNB to exit ARCIL via 10.1% stake sale
PNB, along with SIDBI and Bank of Baroda, is a sponsor of India SME Asset Reconstruction, and as per the bank's annual report for FY22, the ARC is its associate company.

State-owned lender Punjab National Bank (PNB) on Thursday announced plans to sell its entire 10.1% stake in Asset Reconstruction (India), amounting to 3.25 crore shares. The deal is expected to be completed by December 2022, the bank said in an exchange filing, without disclosing the identity of the purchaser or the consideration of the sale.

The sale process of PNB stake in Asset Reconstruction (ARCIL) is subject to the approval of the RBI, and when completed the bank will cease to be a sponsor of ARCIL.

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The bank is selling its shareholding in ARCIL as the Reserve Bank of India (RBI) norms stipulate that a bank can sponsor only one asset reconstruction company (ARC) and its stake in other ARC should be less than 10%. PNB, along with SIDBI and Bank of Baroda, is a sponsor of India SME Asset Reconstruction, and as per the bank’s annual report for FY22, the ARC is its associate company.

In IDBI Bank in May 2022 exited from ARCIL by selling its entire 19.18% stake in the company, totalling 6.23 shares. Other sponsors in ARCIL include the Indian unit of US-based fund Avenue Capital (Avenue), State Bank of India (SBI), ICICI Bank, GIC-Singapore, ICICI Home Finance, Karnataka Bank, South Indian Bank and Federal Bank. ARCIL, founded in 2002, reported a total income of Rs 3.04 crore compared to `1.73 crore in the previous year.

The sale in ARCIL by banks also comes after the National Asset Reconstruction Company (NARCL) was formed in 2021, to acquire bad assets from public sector banks. However, the company is said to have missed its June 30 deadline for acquiring 15 bad loans from banks to the tune of Rs 50,000 crore. In June, former State Bank of India executive Natarajan Sundar was appointed as MD & CEO of NARCL.

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