The National Asset Reconstruction Company or Bad Bank will soon induct more directors on the board for fair representation of shareholders and better corporate governance. Sources said that the private sector banks will have 49 per cent representation of the shareholders. The Reserve Bank of India (RBI) had earlier this month granted licenses worth Rs 6,000 crore to NARCL, in which public sector banks hold 51 per cent.
Sources said the private sector banks will have 49 per cent representation of the shareholders. The Reserve Bank has asked NARCL to give full board details soon.
PM Nair appointed as Managing Director
The Indian Banks Association (IBA), which took over the task of setting up the bad bank, has selected a preparatory board for NARCL. The company has appointed State Bank of India (SBI) stressed assets specialist PM Nair as Managing Director.
Other directors on the board are IBA CEO Mehta, SBI Deputy Managing Director SS Nair and Canara Bank Chief General Manager Ajit Krishnan Nair.
RBI granted license for formation of NARCL
Let us tell you that RBI has given license for the formation of National Asset Reconstruction Company Limited (NARCL). NARCL (National Asset Reconstruction Company) was formed in July with the registration with the Registrar of Companies in Mumbai.
The government will give a guarantee of Rs 30,600 crore for the bad bank ie Asset Reconstruction Company. This was announced by the Finance Minister while presenting the budget on 1 February 2021. About 2 lakh crore NPA will be transferred to the bad bank. In the first phase, NPA transfer of 90 thousand crores will be done under this.
what is bad bank
Bad Bank is not a bank, rather it is an Asset Reconstruction Company (ARC). Bad loans of banks will be transferred to this company. With this, banks will be able to give loans to more people easily and this will catch the pace of economic growth of the country. Simply put, when a person or institution does not take money from a bank i.e. loan and return it, then that loan account would be closed. After this, recovery is done according to its rules. In most cases, this recovery is not possible or even if it is not equal. As a result, the money of the banks gets sunk and the bank goes into loss.
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