Union Cabinet Approves Rs 30,600 Crore Guarantee To Tackle Bad Loans NARCL FM Sitharaman

0 22

New Delhi: The Union Cabinet has approved a Central Government guarantee up to Rs 30,600 crore to back Security Receipts to be issued by National Asset Reconstruction Company Limited (NARCL) for acquiring “stressed loan assets”. The decision has been taken as part of resolution of bad loans, Finance Minister Nirmala Sitharaman said today.Also Read – Virat Kohli to Step Down as India’s T20I Captain After 2021 T20 World Cup

FM Sitharaman has also disclosed that in last six financial years, banks have recovered Rs 5,01,479 crore. In 2018, just two of the 21 Public Sector Banks were profitable. However, in 2020-21, only two reported loss for the year, she said. Also Read – On Average 80 Murders, 77 Rape Cases in India Daily in 2020: NCRB Report | Top Points

National Asset Reconstruction Company Limited (NARCL)

  1. NARCL proposes to acquire stressed assets of about Rs 2 Lakh crore in phases within extant regulations of RBI. It intends to acquire these through 15 per cent cash and 85 per cent in Security Receipts (SRs).
  2. NARCL has been incorporated under the Companies Act and has applied to Reserve Bank of India for license as an Asset Reconstruction Company (ARC). NARCL has been set up by banks to aggregate and consolidate stressed assets for their subsequent resolution. PSBs will maintain 51 per cent ownership in NARCL.
  3. The government guarantee of Rs 30,600 crore will remain valid for 5 years. Government guarantee can be invoked by NARCL for meeting the shortfall between the face value of the Security Receipt and the actual realization upon resolution or liquidation, FM Sitharaman said.
  4. 15 per cent cash payment to be made to banks for NPAs based on some valuation, 85 per cent will be given as Security Receipts. For Security Receipts to have their value in tact, Government has to give backstop arrangement, hence the government guarantee of Rs 30,600 crore cleared by the cabinet yesterday, FM Sitharaman said.
  5. Many Asset Reconstruction Companies are there in the private sector, but they hesitate to take up big-ticket asset resolutions, that is why government-backed Security Receipts are required, explained the FM.

India Debt Resolution Company Ltd. (IDRCL)

  • IDRCL is a service company or operational entity which will manage the asset and engage market professionals and turnaround experts. Public Sector Banks (PSBs) and Public FIs will hold a maximum of 49 per cent stake and the rest will be with private sector lenders.
  • “We are also setting up India Debt Resolution Company Ltd. The PSBs will have 49 per cent stake in India Debt Resolution Company Ltd, the rest will be for private players,” Finance Minister Nirmala Sitharaman said.

Steps Taken By Government To Tackle NPA

  • To tackle the non performing asset (NPA) in banking sector, the central government had come with 4 R strategy of Recognition, Resolution, Recapitalisation and Reforms. After recognition, quantification of NPAs started in a planned manner, recovery too started. In last 6 financial years, the 4Rs were executed meticulously, banks have recovered Rs 5,01,479 crore, FM Sitharaman has said.
  • Out of the amount of Rs. 5,01,479 Lakh Crore recovered by banks during last 6 years, Rs 99,996 Crore comprises amount recovered from written off assets, FM Sitharaman has said.
  • Out of Rs 5,01,479 Crore recovered by banks during last 6 years, Rs 3.1 Lakh Crore has been recovered since March 2018, FM Sitharaman disclosed during the media interaction.
  • “In 2018, just two of the 21 Public Sector Banks were profitable. I am happy to say that in 2020-21, only 2 reported loss for the year,” FM Sitharaman said.


Also Read – GAL vs LAZ Dream11 Team Tips And Predictions, Europa League: Football Prediction Tips For Today’s Galatasaray vs Lazio on September 16, Thursday

$(document).ready(function(){ $('#commentbtn').on("click",function(){ (function(d, s, id) { var js, fjs = d.getElementsByTagName(s)[0]; if (d.getElementById(id)) return; js = d.createElement(s); js.id = id; js.src = "//connect.facebook.net/en_US/all.js#xfbml=1&appId=178196885542208"; fjs.parentNode.insertBefore(js, fjs); }(document, 'script', 'facebook-jssdk'));

$(".cmntbox").toggle(); }); });

Source link

Denial of responsibility! TheNewsMotion is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – [email protected]. The content will be deleted within 24 hours.

Leave A Reply

Your email address will not be published.