The government backed National Asset Reconstruction Co Ltd (NARCL) has offered to acquire another Rs 1.25 lakh crore of non-performing assets (NPAs) from banks with offers at various stages of due diligence and evaluations, the finance ministry said in the pre-budget economic survey for 2023-24.
This is in addition to the 18 accounts with total banking loan exposure of around Rs 92,000 crore acquired by NARCL so far, including the takeover of distressed NBFCs Srei Infrastructure Finance Ltd and Srei Equipment Finance Ltd as a resolution applicant, While offers on assets worth Rs 1.25 lakh crore are at different stages of acquisition, due diligence, and evaluations for assets of around Rs 40,000 crore are underway.
NARCL started operation in January 2022 and acquires bad loans from banks, by paying 15% of the amount in cash and the rest in security receipts (SRs) which are to be matched with recovery over time. These SRs are guaranteed by the government, valid for five years, to be invoked by banks in case of resolution or liquidation of the bad loan. It covers the shortfall between the face value of security receipts issued and actual realisation from the account when NARCL finds a buyer, which is the main USP for the government backed bad bank.
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