Bad Bank gets green signal, this year banks will have NPA of 50 thousand crores transferred

In the current financial year, 15 bad loans, whose value is about 50 thousand crore rupees, will be transferred to the bad bank.

In the first tranche, a bad loan of 50 thousand crores will be transferred.

State Bank of India Chairman Dinesh Khara (SBI Chairman Dinesh Khara) said that Bad Bank (Bad Bank) i.e. National Asset Re-Construction Company (NARCL) is fully ready for its functioning. He said that in the current financial year, 15 bad loans, whose value is about 50 thousand crore rupees, will be transferred to the bad banks. The banks together have agreed to transfer a loan of 82 thousand 425 crores to the bad bank. This will be the first tranche of 50 thousand crores. On 1 February 2021, Finance Minister Nirmala Sitharaman announced the bad bank. After a year, it has now been announced before the budget 2022.

Khara said that public sector banks will have more stake in the bad bank. He said that the work of India Debt Resolution Company Limited ie IDRCL would be recovery from the NPA account. Please note that both IDRCL and NARCL are the same entity. Khara said that this will improve the health of the banking sector.

Balance sheets are being cleaned with the help of provisioning

Nirmala Sitharaman had said in her budget 2021 speech that the condition of public sector banks is bad. Banks are resorting to provisioning on a large scale. With the help of this, they are strengthening their balance sheet. Khara said NARCL will take over the identified NPA accounts from banks, while IDRCL will handle the debt resolution process. Its work will be to recover from the NPA account.

The responsibility of IDRCL will be on private banks

NARCL will be headed by Padma Kumar Nayar, former Chief General Manager of State Bank, while SBI Deputy Managing Director Subroto Biswas has been appointed as its chairman. IDRCL will be headed by Manish Makharia. NARCL will be a public sector entity, while the responsibility of IDRCL will be mainly on private banks.

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