National Assets Reconstruction Company Ltd (NARCL) on Tuesday said Natarajan Sundar has assumed the charge of MD and CEO of the Rs 6,000-crore bad bank. In addition, the company led by Canara Bank said that two independent directors have also joined the board.
Prior to this, Sundar was deputy managing director and chief credit officer of SBI. He retired on April 30, 2022. He was chosen for the post through a competitive selection process carried out after an open advertisement. Sundar was interviewed in April 2022 by a selection panel consisting of senior bankers from both public and private sectors, NARCL said in a statement.
After his name was recommended for the position by the NARCL board, the proper approval was granted by banking sector regulator RBI on May 24, 2022. The interim MD Padmakumar Nair, who was on secondment from SBI, has since been repatriated to the parent bank.
NARCL has also appointed former MD and CEO of Indian Overseas Bank Karnam Sekar as the independent director and non-executive chairman of the board. Besides, the retired executive director of RBI Malvika Sinha joined the board as an independent director last week.
Apart from the above, the NARCL board now has 5 nominee directors from shareholder banks and one more independent director is expected to join the board shortly, it said, adding, with this the board will have its full strength of 9 directors. NARCL has shareholding from 15 Indian lenders and Canara Bank is the sponsor of this Asset Reconstruction Company (ARC).
Together with debt management company IDRCL, they are presently engaged in completing the financial and legal due diligence of the identified accounts for take over from lenders, and are expected to make binding financial offers for a few accounts very shortly, it said. In September last year, the government had announced a guarantee worth Rs 30,600 crore to security receipts issued by NARCL. The guarantee is valid for five years.
Banks have identified a total of 38 NPA (Non-Performing Asset) accounts worth Rs 82,845 crore to be transferred to NARCL initially. The transfer of 38 stressed accounts will happen in a phased manner, with banks agreeing to transfer 15 NPA accounts worth Rs 50,000 crore in the first phase by March 2022. NARCL will try to identify and acquire assets in the ratio of 15:85 for cash and Security Receipts (SRs).
While public sector banks have taken a majority stake in NARCL, India Debt Resolution Company Ltd (IDRCL) will be majorly owned by private sector banks. SBI, Union Bank of India, and Indian Bank have picked up 13.27 percent stake each in NARCL. In her Budget 2021-22 speech, finance minister Nirmala Sitharaman had announced that the government intends to set up a bad bank.
"An asset reconstruction company and asset management company would be set up to consolidate and take over the existing stressed debt," she had said in the Budget speech. It will then manage and dispose of the assets to alternate investment funds and other potential investors for eventual value realisation, she added.