Presentation 547

By-
Abhishek Kumar Singh
11712442
NEWS HEADLINES

Date- 17-09-21

Link-

https://m.econ
omictimes.com /
industry/bankin
g /fi nance /banki
ng /bad-bank-se
curity-receipts-
to-get-govt-bac
 INTRODUCTION
1-The NARCL has been incorporated under the Companies Act
and has applied to the Reserve Bank of India for license as an
Asset Reconstruction Company (ARC). NARCL is basically a bad
bank created by the government in the mould of an asset
reconstruction company.

 2-The bad bank will manage and dispose the assets to alternate
investment funds and other potential investors for eventual value
realisation.
 INTRODUCTION

1 - N ati onal Asset Reconstru ction Com pa ny Ltd (NARCL) would be

operat iona l s oon wi th a m ission to ensu re res olving ba d loa ns with in
fi ve yea rs.

2 - Govern men t approved a gu aran tee of 30,600 cr ore to be provided

for th e sec uri ty recei pts issu ed by the NARCL to bu y bad loan s of
l ender.

3 -The N ARCL wi l l acqu ire stres sed a ssets of a bou t 2 trillion in

p has es, a nd th ese sou red loa ns wou ld be tra nsferred by paying 15
p er cen t ca sh to l end ers an d the rema ining 85 per cent w ou ld be
p ai d through sec uri ty rec eipts.
4- The receipts will be tradable.
 STEPS INVOLVED
1-N ARCL to acq uire asse ts by m aking an off er to the lead bank

2-Once the off er is accepte d, India De bt Re solution Com pany, in

which PSBs will hold up to 4 9% stake, will b e engaged f or
manag em ent and value addition

3- N ARCL to r esolve stre sse d loans above 5 00 crore each,

am ounting to about 2 trillion.

4- Fully provisione d assets of 9 00 0 crore to be transferre d

to NAR CL in fi rst phase.
 Advantages
A-The backing will make the entire process more viable
and credible.

B- The guarantee will cover the shortfall between the face

value of the SRs and the actual realisation from the stressed
assets.

C- The framework will facilitate freeing up of personnel in

banks to focus on increasing business and credit growth.
THANK YOU