Non-Performing Assets (NPA) Recovery of Rs 2 Lakh Crore by NARCL

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Non-Performing Assets (NPA) Recovery of Rs 2 Lakh Crore by NARCL

Recently, National Asset Reconstruction Company Limited (NARCL) has received Non-Performing Assets (NPA) of Rs 2 lakh crore.

It may be noted that the National Asset Reconstruction Company Limited (NARCL) was proposed in this year’s budget. It was introduced to take over stressed loans of banks.

Key Points:

  • It is to be noted that along with NARCL, an asset management company i.e. Indian Debt Management Company was also proposed in the budget.
  • Its objective is to carry on the business of an Asset Reconstruction Company (ARC).
  • It should be noted that ARC is a special type of financial institution. It purchases the liabilities of the bank at a mutually agreed price and attempts to recover the debt or related securities on its own.
  • The company will pay 15 per cent in cash to banks and 85 per cent in the form of security receipt for the transfer of stressed assets.
  • NARCL shall also manage, enforce, sell or recover any property or assets which may, among other matters, fall within its jurisdiction.
  • NARCL will manage these assets and sell them to alternative investment funds and other investors to recover the value of these assets. At present eight public sector banks are its shareholders. At the same time, private sector banks are also trying to get a stake in it.
  • Though the Government does not hold any equity stake in the company, it will provide a guarantee against loan loss on a security receipt issued by NARCL.

Source – The Hindu

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