NARCL holds Rs 1.05 lakh crore banks’ bad assets, eyes resolution of 28 accounts

NARCL, backed by government guarantees, plays a crucial role in cleaning up the balance sheets of banks by acquiring and resolving non-performing assets

The National Asset Reconstruction Company Limited (NARCL) has acquired 24 stressed accounts amounting to Rs 1.05 lakh crore, with plans to take over four more, as the government remains focused on resolving bad assets, Financial Services Secretary M. Nagaraju and his team said on February 3.

Nagaraju noted that the approval for Rs 30,000 crore in Security Receipts (SRs) had been taken from the Expenditure department of the Finance Ministry, though the entire amount may not be utilised. “Originally, the estimated stressed assets stood at Rs 2 lakh crore. With an 18 percent recovery rate, we expected to recover about Rs 36,000 crore. As per the 85 percent SR-backed calculation, Rs 30,000 crore SRs were held,” he explained.

Swiss Challenge
NARCL, the government-backed bad bank, has been actively acquiring and resolving stressed assets, though a significant portion has already been resolved outside its purview. “Over the last two to three years, many bad assets were resolved through mechanisms such as NCLT proceedings, One-Time Settlements (OTS), negotiations, and restructuring. This reduced the volume of assets available for transfer,” he said.

As of now, 24 accounts have been transferred to NARCL. Two more are in the advanced stages of resolution under the Swiss challenge method, and another two are set to be initiated soon, bringing the total number of accounts under NARCL’s purview to 28.

“The intention of the government is to ensure the resolution of assets. The committee of creditors is adopting the Swiss challenge route for this process,” he added. Under the Swiss challenge method, bidders can offer a counter-proposal to an initial bid, ensuring transparency and maximising recovery.

Committee to Identify Additional Stressed Assets
In a bid to expedite the resolution of bad loans, a committee has been formed under the chairmanship of State Bank of India (SBI) to identify additional stressed assets. These assets could either be transferred to NARCL or handled by any other Asset Reconstruction Company (ARC) via the Swiss challenge.

“A committee has been formed under the SBI chairman to look into additional stressed assets that can be pooled together and put up for a Swiss challenge. The assets may go to NARCL or any other ARC,” Nagaraju said.

NARCL, backed by government guarantees, plays a crucial role in cleaning up the balance sheets of banks by acquiring and resolving non-performing assets.