IBA seeks licence to set up bad bank

NEW DELHI: The Indian Banks’ Association (IBA) has moved an application to the RBI seeking licence to set up a Rs 6,000-crore National Asset Reconstruction Company (NARCL) or bad bank, according to sources.
NARCL was incorporated last month in Mumbai following the registration with Registrar of Companies (RoC).
According to sources, the company after mobilising an initial capital of Rs 100 crore and fulfilling other legal formalities has approached the RBI seeking licence to undertake asset reconstruction business.
The RBI in 2017, raised the capital requirement to Rs 100 crore from the earlier level of Rs 2 crore, keeping in mind the higher amount of cash required to buy bad loans.
The RBI has a procedure for granting licence for such businesses, sources said, adding, it could take a few weeks to obtain licence from the regulator.
IBA, tasked with setting up a bad bank, has put a preliminary board for NARCL in place. The company has hired P M Nair, a stressed assets expert from SBI as the MD.
The other directors on the board are IBA CEO Sunil Mehta, SBI deputy MD S S Nair and Canara Bank’s CGM Ajit Krishnan Nair.