NARCL incorporated with authorised capital of Rs 100 crore

By: |
July 13, 2021 3:45 AM

Last month, the IBA had filed an application with the MCA to incorporate NARCL and India Debt Management Company (IDMCL) for managing bad debt in the system. While NARCL is a registered company now, IDMCL is yet to become a legal entity.

The accounts which have been identified by the banks include Reliance Naval and Engineering, Amtek Auto, Castex Technologies, Visa Steel, Wind World India and Lavasa Corporation, among others.The accounts which have been identified by the banks include Reliance Naval and Engineering, Amtek Auto, Castex Technologies, Visa Steel, Wind World India and Lavasa Corporation, among others.

The National Asset Reconstruction Company (NARCL) is a legal entity now and has been registered with the Registrar of Companies (RoC) Mumbai. According to data available with the Ministry of Corporate Affairs (MCA), NARCL was incorporated on July 7 with an authorised capital of Rs 100 crore and paid-up capital of Rs 74.6 crore. The Indian Banks Association (IBA) is likely to approach the Reserve Bank of India (RBI) this week to seek an ARC (asset reconstruction company) licence, sources said.

Last month, the IBA had filed an application with the MCA to incorporate NARCL and India Debt Management Company (IDMCL) for managing bad debt in the system. While NARCL is a registered company now, IDMCL is yet to become a legal entity.

Lenders have identified 22 stressed accounts worth around Rs 89,000 crore that are expected to be transferred to the new entity in the first phase. Over time, a much larger exposure of an estimated Rs 2 lakh crore is expected to be transferred to the NARCL.

While SBI is expected to transfer around Rs 20,000-crore bad assets to the bad bank, Punjab National Bank (PNB) may transfer around Rs 8,000-crore NPAs to it. Union Bank of India has identified Rs 7,800-crore bad loans for transferring to NARCL.

The accounts which have been identified by the banks include Reliance Naval and Engineering, Amtek Auto, Castex Technologies, Visa Steel, Wind World India and Lavasa Corporation, among others.

While Canara Bank has announced it would be the sponsor of the NARCL and hold a 12% equity, other large public sector banks are expected to pick up less than 10% each in the ARC. NARCL is expected to acquire stressed assets at net book value by offering 15% of it in upfront cash, and the rest (85%) in the form of security receipts (SRs). The upfront cash that banks receive would result in a write-back of provision for the lenders as the accounts that banks have chosen to transfer to NARCL are completely provided. According to sources, the government is expected to give a guarantee on SRs to make the bad loan resolution process more viable and attractive.

In her Budget speech, finance minister Nirmala Sitharaman had announced setting up of an ARC and asset management company for the resolution of stressed assets.

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