National Asset Reconstruction Company Ltd (NARCL), the name coined for the bad bank announced in Union Budget 2021-22, is expected to be operational in June.
Bad bank refers to a financial institution that takes over the bad assets of lenders and undertakes resolution.
The new entity is being created in collaboration with both public and private sector banks, said Sunil Mehta, chief executive officer (CEO) of Indian Banks’ Association.
“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.
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.
April 19, 2021
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The Reserve Bank of India (RBI) has set up a six-member committee to undertake a comprehensive review of the working of Asset Reconstruction Companies (ARCs) in the financial sector ecosystem, and recommend suitable measures for enabling such entities to meet the growing requirements of the financial sector.
The committee, headed by Sudarshan Sen, former Executive Director, RBI, will review existing legal and regulatory framework applicable to ARCs and recommend measures to improve efficacy of ARCs.
It will review the role of ARCs in resolution of stressed assets, including under Insolvency & Bankruptcy Code (IBC), 2016.
To make suggestions
The committee will make suggestions for improving liquidity in and trading of security receipts; and review of business models of the ARCs. It will submit its report within three months from the date of its first meeting.