To improve the condition of banks, RBI will create Rs. 6000 crore bad bank

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New Delhi, 18 July 2021 Sunday

The Indian Banks Association (IBA) will soon apply for the formation of National Asset Reconstruction Company Limited (NARCL) or Bad Bank with a proposed capital of Rs 6,000 crore from the Reserve Bank of India. Initially, there is a process of withholding capital of Rs 100 crore. The IBA has received a license for this from the Registrar of Companies.

The Indian Banks Association (IBA) will soon apply for the formation of National Asset Reconstruction Company Limited (NARCL) or Bad Bank with a proposed capital of Rs 6,000 crore from the Reserve Bank of India. Initially, there is a process of withholding capital of Rs 100 crore. The IBA has received a license for this from the Registrar of Companies.

Sources gave this information. Sources said that after the registration of the company, the process of withholding capital of Rs 100 crore is being done as per the guidelines. The next step will be an audit. The IBA will then apply to the Reserve Bank for an Asset Restriction Company license. In 2017, the Reserve Bank increased the capital requirement from Rs 2 crore to Rs 100 crore. The central bank believes that more money is needed to buy a bad loan.

Working capital will be withheld in eight banks

The services of legal advisor AZB & Partners have been hired to obtain various regulatory approvals. Along with this, it will also complete other legal formalities. Sources said the initial capital for this would be invested in 8 banks. These banks have shown commitment to this. Following the approval of the Reserve Bank, NARCL will increase its capital base to Rs 6,000 crore.

The board of directors will also be expanded

Sources said that after the approval of the Reserve Bank, other equity participants will join it. Its board of directors will also be expanded. The IBA has been entrusted with the responsibility of setting up a bad bank. The initial board of NARCL has been formed.

Appointment of PM Nair as Managing Director

The company has appointed SBI's straight assets specialist PM Nair as its managing director. Other directors on the board include IBA Chief Executive Sunil Mehta, SBI Deputy Managing Director S.S. Nair and Ajit Krishna Nair, Chief General Manager, Canara Bank.

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