National Asset Reconstruction Company (NARCL) and Indian Debt Resolution Company (IDRCL) have received approval including from Reserve Bank of India (RBI) to set up bad bank.
Lenders will transfer 15 large ticket stress loans worth Rs 50,000 crore in the first tranche to the NARCL by the end of March 2022 for resolution.
By current assessment, lenders have a total of 38 accounts involving aggregate loans of Rs 83,845 crore, which have been identified for transfer.
This is scaled down target to compared to Rs two trillion to be given to NARCL, also called as bad bank.
Lenders will get upfront 15 percent cash and 85 percent in form of security receipts backed by guarantee from the government of India.
The approval for NARCL has been granted under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002.
State-owned lenders including State Bank of India (SBI), Union Bank of India, Punjab National Bank (PNB) and Indian Bank are taking majority stake in the NARCL. The private sector lenders will hold majority stake in debt resolution company.