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India’s Bad Bank gets RBI nod
January 31, 2022
India’s very own Bad Bank is now live, with all approvals to set up the National Asset Reconstruction co. ltd. and India Debt resolution co. ltd. in place. The development comes ahead of the Union Budget 2022, and almost a year after the Bad Bank was announced in the Union Budget of 2021.
Banks have agreed to transfer 15 accounts with approx. ₹50,000 cr outstanding to the NARCL in the first phase by the end of the financial year, said Dinesh Khara, the chairman of SBI while announcing the development on Friday.
So far, banks have already identified 38 large stressed accounts with over ₹500 cr of loans outstanding each to be transferred to the NARCL in phases, with the total outstanding at ₹83,845cr Khara said. However, the total amount expected to be transferred to the NARCL has been reduced to ₹1.50 lakh cr from ₹2 lakh cr estimated earlier.
Dinesh Khara this was because some assets identified last year were already resolved, while some that were declared as fraud have been excluded from the identified list. All identified accounts at 100% provided for by banks.
SBI, MD said, “The universe of 2 trillion was identified based on ₹500cr and above the cut-off for the banking system being in the stressed asset’s book”.
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