Things around Bad Bank or say National Asset Reconstruction Company Limited (NARCL) have started to move. According to Moneycontrol, State Bank of India (SBI) Padmakumar Madhavan Nair has been named the Chief Executive Officer (CEO) of the NARCL.
Currently, Nair is the Chief General Manager of Stressed Assets Resolution Group, SBI. According to the report, he has been in charge of this department for the last few years and has experience in stressed assets management for many years.
He has served as the Senior Vice President at SBI Capital Markets as well. For over a year, he held the position of CEO at SBI in Los Angeles. Nair has been with India’s largest lender and its subsidiaries for over two decades.
The bad bank is expected to operate on the prevalent 15:85 structure, where only 15 per cent will be paid as cash and the rest would be security receipts.
Recently, State Bank of India Managing Director Swaminathan J said state-run lenders will take a lead in the creation of the bad bank, but the sick asset resolution platform needs the support of private banks and other lenders to be successful.
During the 2021 union budget, Finance Minister Nirmala Sitharaman announced the creation of a bad bank. This entity will hold stressed assets which can be sold on to investors at a reduced price.
“An Asset Reconstruction Company Limited and Asset Management Company would be set up to consolidate and take over the existing stressed debt,” she had said in the Budget speech.
It will then manage and dispose of the assets to alternate investment funds and other potential investors for eventual value realisation, she added.
Last year, IBA had made a proposal for the creation of a bad bank for swift resolution of non-performing assets (NPAs). The government accepted the proposal and decided to go for asset reconstruction company (ARC) and asset management company (AMC) model for this.
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