IBA awaits RBI nod to set up Rs 6,000 cr bad bank: Report
The Indian Banks’ Association (IBA) has moved an application to the Reserve Bank of India (RBI) seeking licence to set up a Rs 6,000-crore National Asset Reconstruction Company Ltd (NARCL) or bad bank, according to sources.
NARCL was incorporated last month in Mumbai following the registration with Registrar of Companies (RoC).
According to sources, the company after mobilising an initial capital of Rs 100 crore and fulfilling other legal formalities has approached the RBI seeking licence to undertake asset reconstruction business.
The RBI in 2017, raised the capital requirement to Rs 100 crore from the earlier level of Rs 2 crore, keeping in mind the higher amount of cash required to buy bad loans.
RBI has its process and procedure for granting licence for such business, sources said, adding, it could take next few weeks to obtain licence from the regulator.
RBI’s approval could come either in September or October, sources added.
Legal consultant AZB & Partners has been engaged to seek various regulatory approvals and fulfilling other legal formalities.
IBA, entrusted with the task of setting up a bad bank, has put a preliminary board for NARCL in place. The company has hired P M Nair, a stressed assets expert from State Bank of India (SBI), as the managing director.
The other directors on the board are IBA Chief Executive Sunil Mehta, SBI Deputy Managing Director SS Nair and Canara Bank’s Chief General Manager Ajit Krishnan Nair.