On October 04, 2021, the Reserve Bank of India (RBI), gave a licence to the Rs 6,000 crore National Asset Reconstruction Company Ltd (NARCL) to start operations as the bad bank.
- The licence was granted under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.
i.In July 2021, the Ministry of Corporate Affairs (MCA) has incorporated the NARCL also known as Bad Bank /Asset Reconstruction Company (ARC) after its registration with the Registrar of Companies (RoC). Click here to know more
ii.In August 2021, IBA applied to RBI seeking a licence to set up a Rs 6,000 crore NARCL.
iii.NARCL was created in collaboration with both Public and Private Sector Banks, and Indian Banks’ Association (IBA) to aggregate and consolidate stressed assets for their subsequent resolution.
iv.51 percent of NARCL will be owned by PSBs and the remaining by private-sector lenders. The NARCL will acquire assets by making an offer to the lead bank. Once NARCL’s offer is accepted, then, IDRCL will be engaged for management and value addition.
Board of NARCL:
- Padmakumar Madhavan Nair, a stressed assets expert from the State Bank of India (SBI) was hired as the Managing Director (MD) of NARCL.
- Other Directors are Sunil Mehta, IBA’s Chief Executive, Salee Sukumaran Nair, Deputy MD of SBI, and Ajit Krishnan Nair, Canara Bank’s representative.
i.NARCL will pay up to 15 percent of the agreed value for the bad loans in cash and the remaining 85 percent would be government-guaranteed SRs.
ii.In September 2021, the Union Cabinet approved a government guarantee of up to Rs 30600 crore to back Security Receipts (SRs) for 5 years that will be issued by NARCL. Click here to know more.
iii.Recently, in September 2021, SBI, Union Bank of India, Indian Bank picked up 13.27 percent stake each in the NARCL, while Punjab National Bank acquired about 12 percent stake.
iv.The lead bank with an offer in the hand of NARCL will go for a ‘Swiss Challenge’.
Note – A Swiss Challenge is a method of bidding, often used in public projects, in which an interested party initiates a proposal for a contract or the bid for a non-performing asset project.
RBI Permitted Emirates NBD Bank to Open Branches in India
RBI has granted permission to Emirates NBD Bank, Dubai, the government-owned bank of UAE (United Arab Emirates), to open two more branches in India
- Emirates NBD has maintained a Representative Office in India since March 2000.
- The representative office was closed in March 2017 and has been upgraded to a bank with a first branch in Mumbai, Maharashtra.
- Among other countries, the group has operations in UAE, Egypt, Turkey, Saudi Arabia, Singapore, Austria, Germany.
Recent Related News:
In September 2021, the government has set up the India Debt Resolution Company Ltd (IDRCL), an asset management company (AMC) that will work with the NARCL/Bad Bank to clean up bad loans (i.e Non-Performing Assets (NPAs))
About Emirates NBD Bank:
Establishment – 2007
Headquarters (Global) – Dubai, United Arab Emirates
Headquarters (India) – Mumbai, Maharashtra
Vice Chairman and Managing Director – Hesham Abdulla Qassim Al Qassim.