Indian Banks AssociationIBA) CEO Sunil Mehta tweeted.
IBA entrusted with the task of setting up a bad bank has put up a preparatory board for NARCL.
The company has appointed stressed assets expert PM Nair of State Bank of India (SBI) as Managing Director.
Other directors on the board are IBA CEO Mehta, SBI Deputy Managing Director SS Nair and Canara Bank Chief General Manager Ajit Krishnan Nair.
Finance Minister Nirmala Sitharaman had said in the Budget for 2021-22 that there is a need for measures to clean up bank accounts by public sector banks for higher levels of provisioning of their stressed assets.
“An Asset Reconstruction Company Limited and Asset Management Company will be set up to consolidate and manage the existing stressed debt,” he had said in the budget speech.
It had said it would manage and dispose of the assets to alternative investment funds and other potential investors, so that the final value could be realized.
Last month, the cabinet approved a proposal to provide government guarantee of Rs 30,600 crore on security receipts issued by NARCL.
NARCL will pay 15 per cent of the agreed value for bad loans in cash and the remaining 85 per cent will be a government-guaranteed security receipt.
It will be 51 percent owned by public sector banks and the rest with private sector lenders.
Last week, SBI, Union Bank of India, Indian Bank bought 13.27 per cent stake in NARCL, while Punjab National Bank acquired around 12 per cent.
NARCL will take over the identified bad loans of the lenders.
The lead bank with a proposal in hand of NARCL will go for the ‘Swiss Challenge’ to improve the offer made by a chosen bidder to find a higher valuation of a non-performing asset on sale to other asset reconstruction players. will be invited. .
The company will take up those assets which are 100 per cent provided by the lenders. Banks have identified around 22 bad loans worth Rs 90,000 crore to be transferred to NARCL in the initial phase.