Lenders to transfer bad loans to NARCL
According to a senior Banker, Lenders have decided to transfer 22 bad loan accounts due with ₹89,000 crores to National Asset Reconstruction Company Limited(NARCL), which would help in the clear out of their balance sheets.
All leading Banks of India have been asked by The Indian Banks’ Association (IBA) to arrange for meetings to review the approval policies as soon as the ARC is structured.
The chairman of IBA and the chief executive of Union Bank of India, Rajkiran Rai G said: “I think the assessment in the first phase was for 22 accounts of about ₹89,000 crores”.
Rai completed his estimations and said that banks have recognized accounts that would be able to go to the NARCL in the first phase. The administration would look at these assets, and consider it’s worthwhile after the ARC is formed then only they would make an offer.
The advantage of this suggested ARC would be its ability to make a collection of bad loans from all members of the alliance. ARCs would buy bad assets from individual banks while other banks may choose not to part with their exposure in the same loan. This would act as an obstacle to quick decision-making when it can in stabilizing the resolution plans.
On being asked if the loans would be transferred to this suggested ARC after the initial ₹89,000 crores, Rai elaborated that an increased number of loans would be transferred in phases.