Public sector banks shortlisted 28 loan accounts to be transferred to the National Asset Reconciliation company (NARCL) . Of these, lead banks have completed the process of obtaining approval from co- lenders in 22 accounts with Rs 82,500 crore of loans due. Within this amount borrowers such as VOVL, Amtek Auto, Reliance Naval, Jaypee infratech, castex Technologies, GTL, visa steel and wind world account for 80%.
Other large companies that are to be sold to the NARCL include Lavasa corporation,Ruchi worldwide consolidated construction and a few toll project.
According to banking sources, work is progressing fronts to ensure that the bad bank starts operations as soon as possible. On Wednesday, bankers met to finalise the capital structure of the bad bank (NARCL). Sources said that the company would need at least Rs 6,000 – crore capital of equity and debt to start operation. In terms of Reserve Bank of india ( RBI) regulations, asset reconstruction companies( ARCs) must pay 15% of the purchase consideration in cash upfront. Even if these 22 non – performing assets (NPAs) were valued at 50% of the loan account, the ARCs would have to pay over Rs 12,000 crore to banks. The NARCL can, however, raise money on its own.
Now , banks must seek the resolution of fraudulent accounts with the bankruptcy courts or the debt recovery tribunal (DRT). Once an account is declared a fraud, banks don’t enter into a settlement with the borrower
Increasing instances of fraud have led top banks and asset managers to seek central bank nod to allow the sale of such accounts to asset reconstruction companies (ARCs), something the banking regulator currently prohibits.
These stakeholders also want ARCs to be granted indemnity from any prosecution arising out of a fraudulent account. “During the central bank consultation process, some stakeholders flagged off this issue with the committee and sought a review to allow the sale of fraudulent accounts and give ARCs the legal immediately against further prosecution by any investigating agency, ” an official involved in the consultative prosess with the Reserve Bank of India told Etc.