India’s bad bank aims at Rs 2 lakh cr stressed assets by FY25, says DFS secretary Vivek Joshi

The government hopes NARCL will be able to take over Rs 2 lakh crore of stressed assets by the end of 2024-25.

India’s bad bank or the National Asset Reconstruction Company Ltd (NARCL) aims to take over Rs 2 lakh crore of banks’ stressed or non-performing assets (NPAs) by the end of FY25, department of financial services (DFS) secretary Vivek Joshi said.

So far, NARCL has taken over approximately Rs 88,000 crore of banks’ stressed assets and is doing due diligence for another Rs 60,000 crore.

“In total, NARCL has taken Rs 88,000 crore stressed assets from banks. By the end of 2023-24, NARCL will be able to complete taking over around Rs 1 lakh crore of banks’ NPAs. The target was Rs 2 lakh crore, but they have not been able to make much progress on it currently,” Joshi told Moneycontrol in an interview.

Giving a breakup of the Rs 88,000-crore assets, he said NARCL has acquired eight accounts worth Rs 58,000 crore.

Swiss Challenge has been initiated for another two accounts worth Rs 10,000 crore. In another nine accounts worth Rs 20,000 crore the Swiss Challenge is yet to be initiated, he said.

The so-called Swiss Challenge is a form of public procurement in which other asset reconstruction companies are invited to make offers to find the higher valuation of the stressed assets on sale.
NARCL was doing its due diligence for another 23 accounts worth around Rs 60,000 crore, Joshi said.

“The government hopes NARCL will be able to take over Rs 2 lakh crore of stressed assets by the end of 2024-25. That is the target they have been given,” Joshi said.

NARCL acquires fully provisioned stressed assets by making an offer to the lead bank in a consortium of lenders. Once the offer is accepted, NARCL engages in management and resolution of the stressed assets.

Finance Minister Nirmala Sitharaman recently reviewed the progress made by NARCL.

“NARCL is picking up speed, monitoring from the ministry is happening. We have made some changes in management and the Finance Minister has held a review meeting. All of this is bringing results,” he added.