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Banks to transfer 22 loan accounts worth Rs 89,000 crore to proposed Bad Bank, says IBA Chairman

The figures are based on preliminary estimates and what the company buys will ultimately depend on its own appetite, Rai said.

June 07, 2021 / 07:16 PM IST
Indian banks are sitting on gross NPAs of nearly 8 percent.

Indian banks are sitting on gross NPAs of nearly 8 percent.

Indian banks have identified 22 loan accounts worth a total outstanding of Rs 89,000 crore to shift to the proposed National Asset Reconstruction Company (NARCL), according to Rajkiran Rai, chairman of the industry lobby Indian Banks’ Association (IBA). Rai is also the chief of state-run Union Bank of India.

The establishment of the NARCL was announced in the Union Budget for 2021-22 for aggregating the chunky bad assets in the banking system that still remain unresolved. It is expected to be largely funded by public sector banks and it may begin functioning in July 2021.


These numbers indicate only the accounts where lead banks have been able to hold discussions with other consortium banks, Rai said in a press conference with reporters on Monday. Asked about the terms of transfer, Rai explained that what NARCL eventually buys will depend on its own appetite.


“What we have done is preliminary work to keep the ground ready so that when the ARC is registered, they can start the process. We have broadly identified accounts where there are close to 100 percent provision and which are accounts above Rs 500 crore,” Rai said, adding that for these accounts, lead banks have been asked to call for meetings with other consortium members and keep approvals ready.

Eventually, about Rs two lakh crore worth of bad assets could be transferred to the NARCL in stages.



Without sharing a number for assets BoB plans to transfer, Chadha added that these are likely to be accounts which have very high levels of provision. “My own sense again is that in terms of for us, possibly the impact may be within 5% to 10% of our non-performing book, probably not more than that,” Chadha said.