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More Than Rs 30,000 Cr Guarantee Approved For Bad Bank By Cabinet: FM

The NARCL is going to pay a total of 15 per cent of the agreed value for the cash loans and the remaining 85 per cent is going to be government-guaranteed security receipts.

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The Union Finance Minister Nirmala Sitharaman, on Thursday, said that the Cabinet led by Prime Minister Narendra Modi, on Wednesday, approved a government guarantee of up to Rs 30,600 crore to back security receipts to be issued by the National Asset Reconstruction Company (NARCL). 

The NARCL is going to pay a total of 15 per cent of the agreed value for the cash loans and the remaining 85 per cent is going to be government-guaranteed security receipts.

Sithraman during her address on the bad bank said that the government have addressed issues facing by the banking sector that was staring us in 2015

Banks have recuperated more than Rs 5 lakh crore in the last six Financial Years (FY), of which Rs 3.1 lakh crore has been recuperated since March 2018, Sitharan added. The FM additionally said that Rs 99,000 crore has been recovered from discounted resources like Bhushan Steel, Essar Steel.

Meanwhile FM Sitharaman in Financial Year (FY)22 had announced the proposal of an asset reestablishment company and an asset management company to compile and take charge of the stressed debt of Indian banks.

According to joint research by Assocham and Crisil, gross non-performing assets in Indian banks are projected to surpass Rs 10 lakh billion by March 2022. Due to slippages in retail, MSME accounts, and certain restructured assets, NPAs are anticipated to climb to 8.5-9 per cent by March 2022.

Canara Bank, run by the state, will be the principal sponsor of NARCL, owning 12 per cent of the business, while public sector banks would control 51 per cent.

According to the Finance Minister, the central government wants to establish the India Debt Resolution Company.

The recommended strategy will be used by NARCL to acquire assets. The India Debt Management Co (IDMCL) will manage them and attract institutional money through alternate investment funds under the dual system (AIFs).

Padmakumar Nair of SBI has been named chairman of the NARCL, with Sunil Mehta of IBA serving as non-executive chairman. 

In the first phase, banks identified 22 problematic loan accounts totaling around Rs 89,000 crore, which would be handed to NARCL. The planned band bank would only accept stressed assets of Rs 500 crore or more. This situation applies to about Rs 3 lakh crore of bad loans.


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