Finance Ministry aims to transfer ₹1-lakh crore stressed assets to bad bank (2024)

“There has been lot of progress since then (FM’s Review Meeting). We are targeting ₹1-lakh crore assets transfer mark by March this year," Vivek Joshi, Secretary, Department of Financial Services, said in an interview.

NARCL operates by acquiring bad loans from banks, paying 15 per cent of the amount in cash and the remainder in government-guaranteed security receipts, which banks can invoke during resolution or liquidation.

In December last year, Finance Minister Nirmala Sitharaman instructed NARCL and banks to hold regular meetings to expedite the transfer of stressed accounts. This intervention aimed to bridge the gap between NARCL’s efforts and the banks’ reluctance, ensuring the bad bank’s success.

Banks have hesitated to transfer stressed assets due to price expectation differences and seemingly low offers made by NARCL.

ALSO READ: Are bad banks a bad idea?

Joshi plans to hold another review meeting tomorrow to assess NARCL’s performance with the chief executives of PSBs and bad bank representatives. Joshi dismissed the possibility of a merger between NARCL and India Debt Resolution Company Ltd, citing the advantages of the current structure.

As of now, NARCL has acquired 8 accounts with loan exposure totalling ₹58,000 crore, with Swiss challenge initiated on two accounts ( ₹10,000 crore); Swiss challenge is about to be started on 9 accounts ( ₹20,000 crore); and due diligence is underway in 23 accounts with an aggregate exposure of ₹60,000 crore.

You are on Mint! India's #1 news destination (Source: Press Gazette). To learn more about our business coverage and market insights Click Here!

Published: 07 Feb 2024, 03:54 PM IST