Banks have identified Rs 82,496 crores worth of bad loans that could be transferred to the proposed National Asset Reconstruction Company (NARCL) in the first phase, CNBC-TV18 has learnt. These are across 22 large accounts, which have been 100 percent provided for by banks.
CNBC-TV18 has accessed the full list of these identified accounts which banks propose to transfer to the National Asset Reconstruction Company. These include names like Videocon’s VOVL (Rs 22532 crores total exposure), Reliance Naval and Engineering Ltd (Rs 8,934 crores), Amtek Auto (Rs 9,014 crores), Jaypee Infratech (Rs 7,950 crores), Castex Technologies (Rs 6,337 crores), GTL Ltd (Rs 4,866 crores), Visa Steel (Rs 3,394 crores), Wind World India Ltd (Rs 3,161 crores), Lavasa Corporation (Rs 1,424 crores), Consolidated Construction Consortium Ltd (Rs 1,353 crores), and others. Most of these are legacy accounts where banks have not had much success with resolutions so far, but are hopeful debt aggregation by NARCL will lead to faster recoveries.
“We have broadly identified the accounts where there is almost close to 100 percent provision… This ARC will handle assets above Rs 500 crore and the main advantage of the NARCL is debt aggregation. They should be able to take the whole asset so that decision-making will be quick," said Rajkiran Rai, Chairman of Indian Banks Association, and MD & CEO of Union Bank of India.
Rai also told CNBC-TV18 that he does not expect more than 20-25 percent recovery from these legacy accounts.
When asked why some accounts—where banks are currently working towards a resolution under the bankruptcy code or otherwise–are part of this list, a senior banker explained, “These accounts are only 'identified'. If resolved before NARCL is functional, those may not be transferred.”
Over a period of time, the bad bank or National ARC could house non-performing assets of over Rs 2 lakh crores, according to bankers.
The National ARC was first announced in the Union Budget in February this year after the proposal was made by bankers via the Indian Banks Association. The idea is for the NARCL to house bad loans of over Rs 500 crores each, which will be 100 percent provided by banks. The structure will include an asset management company as well, which will manage these bad loans once acquired by the ARC.
Public sector banks including State Bank of India, Punjab National Bank, Union Bank of India, Bank of Baroda and others, as well as public sector NBFCs like PFRC, REC are expected to hold up to 10 percent stake each in the NARCL.
Here is the full list of 22 accounts that banks have identified for transfer to the proposed National Asset Reconstruction Company:
A senior executive directly involved in the process told CNBC-TV18 on the condition of anonymity, “We are in the process of getting various approvals, registering the NARCL. After this, we will seek RBI’s nod for the ARC. Banks also are individually getting board approvals to acquire a stake in the NARCL.” This person added that it may take a month or longer before all this process is completed, and the bad loan transfer will happen only after that. Other bankers CNBC-TV18 spoke to believe it may take even longer.
According to people in the know, the State Bank of India has identified NPAs with Rs 17,000-18,000 crores outstanding to be transferred to the NARCL but will continue working on their resolutions until such time that the actual transfer happens.
Punjab National Bank has identified Rs 8,000 crores worth of NPAs, Union Bank of India Rs 7,800 crores of NPAs to be transferred to the National ARC. Similarly, the Bank of India has identified about Rs 5,500 crores of assets for transfer, and Indian Bank about Rs 1,900 crores.
(Edited by: By Ajay Vaishnav)
First Published: IST