India to soon get a 'Bad Bank' for absorbing NPAs

India will soon set up National Asset Reconstruction Company Limited or 'Bad Bank' that will absorb the non-performing assets of lenders and clean up their books.

At least 28 non-performing accounts worth Rs 85,000 crore will be transferred to the Bad Bank. In the first phase, however, 15 cases worth Rs 50,000 crore will be transferred to it.

NARCL, which was proposed in the Union Budget of 2021-22, got all approvals on Friday to start operations, State Bank of India Chairman Dinesh Khara said.

Public sector Banks will have a majority stake in the NARCL while private banks will have a majority stake in India Debt Resolution Company Limited (IDRCL), Khara said.

As per the operational structure, NARCL will acquire and aggregate identified NPA accounts from banks while IDRCL will handle the debt resolution process.

“This unique public-private partnership will bring benefit of aggregation, expertise to resolve stressed assets,” Khara said.

Initially, it was estimated that Rs 2 lakh crore worth of assets will be transferred to the bad bank but some of the large cases were resolved subsequently.

Watch the latest DH Videos here: