The finance minister’s Budget speech 2021 revealed the government’s plans to establish an Asset Reconstruction Company to take over bad debt from the books of public sector banks for eventual disposal. That suggests that the ARC route rather than recapitalisation would in the coming months be the main means of refurbishing capital in the public banking system. Since there are as many as 28 ARCs already in existence, the reason why the creation of one more would resolve a problem that is expected to worsen over the coming year is unclear. In fact, past experience indicates that ARCs have not helped enhance the actual recovery of lock-up in stressed assets. This suggests that the move is a means to postpone the problem of bad debt resolution so as to avoid having to recapitalise the banks with budgetary resources, which would widen the central fiscal deficit.
IDBI Bank settles loan with Aircel founder C Sivasankaran
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Last Updated: May 15, 2021, 09:58 AM IST
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According to banking sources, IDBI Bank has already written to the CBI, which has confirmed that commercial dealings will not affect the criminal investigation process.
IDBI Bank had initiated bankruptcy proceedings against Siva Industries in 2019.
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IDBI Bank has said that it has accepted the one-time settlement offer by Siva Industries’s promoters a part of Aircel founder C Sivasankaran’s group as it would lose more money otherwise.
IDBI Bank had initiated bankruptcy proceedings against Siva Industries in 2019. The loans were availed by a group company that later merged with Siva Industries. Sivasankaran is facing investigations by the authorities for causing a loss to banks.
SBIâs P Madhavan Nair named CEO of Bad Bank: Report
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Things around Bad Bank or say National Asset Reconstruction Company Limited (NARCL) have started to move. According to Moneycontrol, State Bank of India (SBI) Padmakumar Madhavan Nair has been named the Chief Executive Officer (CEO) of the NARCL.
Currently, Nair is the Chief General Manager of Stressed Assets Resolution Group, SBI. According to the report, he has been in charge of this department for the last few years and has experience in stressed assets management for many years.
He has served as the Senior Vice President at SBI Capital Markets as well. For over a year, he held the position of CEO at SBI in Los Angeles. Nair has been with Indiaâs largest lender and its subsidiaries for over two decades.
Bad bank refers to a financial institution that takes over bad assets of lenders and undertakes resolution. The new entity is being created in collaboration with both public and private sector banks, Indian Banks Association Chief Executive Officer (CEO) Sunil Mehta told PTI. Various preparatory work is going on and we hope that it should be operational next month. The biggest advantage of NARCL would be aggregation of identified NPAs (non-performing assets). This is expected to be more efficient in recovery as it will step into the shoes of multiple lenders who currently have different compulsions when it comes to resolving a bad loan, he said.
IDBI Bank mulls investing in NARCL
May 03, 2021
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Large public sector and private sector banks will be investing in NARCL, says Rakesh Sharma, MD & CEO at IDBI Bank
IDBI Bank is considering picking up a stake in the National Asset Reconstruction Company (NARCL) which is being set up jointly by banks to clean up their books.
Rakesh Sharma, MD & CEO at IDBI Bank said that large public sector and private sector banks will be investing in NARCL, with each bank taking less than 10 per cent stake. So, IDBI Bank will also consider investing in the company, Sharma said. He observed that consortium loans (₹500 crore and above) will be transferred to NARCL. The quantum of stressed loans to be transferred to NARCL will be a reasonably good number so that the bank is able to reduce its gross non-performing assets, he added.