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    SBI, Canara and 6 other banks buy stake in bad bank; private lenders to follow suit: Report

    SBI, Canara and 6 other banks buy stake in bad bank; private lenders to follow suit: Report

    SBI, Canara and 6 other banks buy stake in bad bank; private lenders to follow suit: Report
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    By CNBCTV18.com  IST (Published)

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    The cumulative investment of the eight public banks has been calculated at Rs 74.6 crore. According to media reports, Canara Bank has expressed its intent to be the lead sponsor of NARCL with a 12 percent stake followed by the State Bank of India with a 9.9 percent stake.

    Eight state-run banks have bought stakes in the National Asset Reconstruction Company Limited (NARCL) — the bad bank-like structure mooted by Finance Minister Nirmala Sitharaman, in her Union Budget 2021 speech, for faster resolution of non-performing assets (NPAs).
    Citing the latest corporate filings, a Mint report states that Canara Bank has purchased 12 million shares of Rs 10 each, Bank of Baroda (BoB), State Bank of India (SBI), Union Bank of India, and Indian Bank have bought 9.9 million shares each; Punjab National Bank (PNB) and Bank of India have bought 9 million shares each; and Bank of Maharashtra has purchased 5 million shares.
    The cumulative investment of the eight public banks has been calculated at Rs 74.6 crore. According to media reports, Canara Bank has expressed its intent to be the lead sponsor of NARCL with a 12 percent stake followed by the State Bank of India with a 9.9 percent stake.
    Four private banks — HDFC Bank Limited, ICICI Bank Limited, Axis Bank Limited, IDBI Bank Limited — are also expected to join the bandwagon and buy shares in the NARCL.
    The banks have committed to expanding NARCL's capital base to Rs 6,000 crore after the Reserve Bank of India's (RBI) nod.
    Meanwhile, the Indian Banks' Association (IBA) — tasked with setting up the bad bank — has put a preliminary board in place for the NARCL.
    The IBA is expected to move an application to the RBI after securing a licence for the NARCL from the Registrar of Companies.
    The association has hired PM Nair, a stressed assets expert from the State Bank of India (SBI), as the NARCL 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.
    The NARCL will have a 51 percent shareholding from the public sector, private sector banks could hold a majority stake in the Debt Management Company. This entity is likely to be tasked with improving the value of the NPAs.
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