Bad bank: Govt guarantee seen costing Rs 30,600 crore

Of the 101 non-performing assets (NPAs) initially reviewed, banks person zeroed successful connected 22 accounts amounting to astir Rs 89,000 crore for transportation to NARCL successful the archetypal phase.

The Indian Banks’ Association (IBA) has estimated that the authorities whitethorn person to fork retired not much than Rs 30,600 crore if it offers warrant connected the information receipts (SRs) issued by the National Asset Reconstruction Company (NARCL) portion acquiring atrocious loans from lenders, a apical banker told FE.

“The prospects of betterment from immoderate of the atrocious loans look promising. So, authorities warrant connected SRs, taxable to its approval, whitethorn not outgo much than this amount. Details are being worked retired by the IBA, and NARCL volition beryllium operationalised soon,” helium said.

Although the authorities backed the mounting up of NARCL, it wouldn’t infuse superior into it; instead, participating banks would enactment successful the equity. Nevertheless, bankers expect the authorities to springiness warrant connected the SRs, which volition marque the solution process much viable and attractive.

Earlier, fiscal services caput Debasish Panda had said banks would person the enactment to transportation respective ample stressed assets (of astatine slightest Rs 500 crore each) worthy Rs 2.25 lakh crore to NARCL initially.

The IBA, which is spearheading efforts to found NARCL, has zeroed successful connected 5 consultants to expedite the process. It has sought quotations from SBI Capital Markets and Oliver Wyman for advisory services; from E&Y for taxation consultations; AZB & Partners for ineligible consultations; and AON Consulting for HR services.

NARCL is expected to get stressed assets astatine nett publication worth by offering 15% of it upfront (in cash), and the remainder (85%) successful SRs. Once the atrocious indebtedness is resolved, realisation for the applicable slope would beryllium successful sync with its SR involvement successful that asset.

The IBA is besides moving retired an “exit strategy” for those accounts that stay unresolved adjacent aft 5 years, said the banker.

Of the 101 non-performing assets (NPAs) initially reviewed, banks person zeroed successful connected 22 accounts amounting to astir Rs 89,000 crore for transportation to NARCL successful the archetypal phase.

Already, the IBA has formed a halfway committee headed by its president (Union Bank of India managing manager Rajkiran Rai) for mounting up NARCL and the Indian Asset Management Company. The committee besides comprises IBA main enforcement Sunil Mehta, State Bank of India MD J Swaminathan, IDBI Bank MD and CEO Rakesh Sharma and ICICI Bank enforcement manager Sandeep Batra.

The projected plus absorption company, comprising professionals, volition beryllium acceptable up wrong the broader NARCL operation that volition enactment retired the toxic assets and instrumentality due decisions, including connected selling them disconnected to investors.