PNB to pick stake in NARCL; plans to transfer Rs 8,000 crore worth NPA


"NARCL is being formed by all the banks whereupon some of the NPA advances will be transferred to that ARC for recovery," PNB MD S S Mallikarjuna Rao said.

PNB to pick stake in NARCL; plans to transfer Rs 8,000 crore worth NPA
Punjab National Bank (PNB) on Saturday said it will pick a stake in the National Asset Reconstruction Company Ltd (NARCL) and has identified NPAs worth Rs 8,000 crore to be transferred to the proposed bad bank for resolution.
A bad bank refers to a financial institution that takes over the bad assets of lenders and undertakes resolution.
"NARCL is being formed by all the banks whereupon some of the NPA advances will be transferred to that ARC for recovery…NARCL is constituted to be promoted by 51 percent share from the public sector space. We are the second largest public sector bank after State Bank of India," PNB managing director S S Mallikarjuna Rao said. All the bigger banks are contributing but the stake of each will be less than 10 percent, he explained.
Rao said NARCL is expected to be operational by next month. We are expecting that by June 30, everything will be put in place. Things would start working from July 1, he said.
In the first tranche, roughly Rs 8,000 crore is identified by the bank to be transferred to NARCL and as a result at the outstanding level that much of the amount will be reduced from the credit, he said. As of now, Rs 84,000 crore worth NPAs have been identified mostly by public sector banks, to be transferred to NARCL, he said.
Asked about the capital raising plan of the bank, Rao said PNB is not looking to raise any further capital as it is sufficiently capitalised. He said the capital adequacy ratio of the bank was 14.32 percent at the end of March 2021 and with the raising of Rs 1,800 crore through Qualified Institutional Placement (QIP) it would go up to 14.62 percent.
Last month, PNB raised Rs 1,800 crore by selling 53 crore shares on a private placement basis to investors like LIC and Societe Generale. There is further headroom to raise capital through the issuance of AT1 Bonds but the call in this regard would be taken after first-quarter numbers, he added.
On a recent order by the special Prevention of Money Laundering Act (PMLA) court on Kingfisher Airlines, Rao said the bank has not much outstanding and PNB will get its share based on the sales proceeds.
A consortium of 11 banks that gave loans to fugitive Vijay Mallya-promoted Kingfisher Airlines had approached a special PMLA court seeking restoration of his properties seized by the Enforcement Directorate. Last week, the special PMLA court in Mumbai allowed the restoration of properties worth Rs 5,646.54 crore to banks.

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