Active Stocks
Mon Apr 22 2024 15:57:16
  1. Tata Steel share price
  2. 161.85 -0.15%
  1. HDFC Bank share price
  2. 1,512.30 -1.24%
  1. State Bank Of India share price
  2. 765.85 2.00%
  1. ICICI Bank share price
  2. 1,087.00 1.93%
  1. Wipro share price
  2. 461.95 2.01%
Business News/ Money / Personal Finance/  Finance Ministry aims to transfer 1-lakh crore stressed assets to bad bank by March-end
BackBack

Finance Ministry aims to transfer ₹1-lakh crore stressed assets to bad bank by March-end

NARCL, commonly known as bad bank, 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.

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

The Finance Ministry is pushing for a significant transfer of stressed assets, amounting to 1-lakh crore, to National Asset Reconstruction Company Ltd (NARCL), commonly known as the bad bank, from state-owned banks by the end of March 2024, a top official said, reported Business Line.

“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.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 07 Feb 2024, 03:54 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App