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Mahesh

08/06/22 20:42 PM IST

First Batch Of Non Performing Assets To Be Shifted To Bad Bank In July

In News 
  • The Finance Ministry  said that the ₹ 6,000-crore National Asset Reconstruction Company (NARCL) or bad bank is expected to take over the first set of non-performing accounts (NPAs) of banks next month.
NARCL 
  • Setting up of NARCL, the proposed bad bank for taking over stressed assets of lenders, was announced in the Budget for 2021-22.
  • The plan is to create a bad bank to house bad loans of ₹500 crore and above, in a structure that will contain an asset reconstruction company (ARC) and an asset management company (AMC) to manage and recover dud assets.
  • The new entity is being created in collaboration with both public and private sector banks.
  • Majority-owned by state-owned banks, the NARCL will be assisted by the India Debt Resolution Company Ltd (IDRCL), in turn majority-owned by private banks, in resolution process in the form of a Principal-Agent basis.
ARC
  • It is a specialized financial institution that buys the Non-Performing Assets (NPAs) from banks and financial institutions so that they can clean up their balance sheets. This helps banks to concentrate on normal banking activities.
  • The asset reconstruction companies or ARCs are registered under the RBI.
Source- Indian Express 

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