NARCL acquires stressed loans of McLeod Russel from consortium of banks
In a significant move towards addressing the mounting debt crisis of McLeod Russel India Limited, the country’s largest bulk tea producer, the National Asset Reconstruction Company Limited, or NARCL has officially acquired the company’s non-performing Assets (NPAs). The transfer was made by a consortium of lenders led by ICICI Bank, following an Assignment Agreement dated March 12, 2025.
The development comes after prolonged efforts by lenders to resolve the company’s debt, which has been under stress for several years due to operational challenges and liquidity constraints. This debt acquisition occurs against the backdrop of ongoing insolvency proceedings initiated over two years ago. In February 2023, the Kolkata Bench of the National Company Law Tribunal (NCLT) admitted an insolvency application filed by IL&FS Infrastructure Debt Fund, citing a default of ₹347 crore by McLeod Russel. The tribunal appointed Ritesh Prasad Adatiya as the interim resolution professional to oversee the Corporate Insolvency Resolution Process (CIRP).
The consortium, which includes ICICI Bank, State Bank of India, HDFC Bank, Axis Bank, Punjab National Bank, UCO Bank, Indian Bank, and RBL Bank, jointly assigned their entire exposure to NARCL, according to a formal intimation issued on March 15, 2025.
Under the terms of the agreement, NARCL has assumed all rights, titles, and interests in the loans and underlying securities of McLeod Russel, as permitted under Section 5 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002. This effectively makes NARCL the new secured creditor for the company.
Sources close to the development indicate that the total exposure transferred amounts to over ₹1,800 crore, although an official figure is yet to be confirmed. The move marks another major transaction for NARCL, also known as the government-backed “bad bank,” which has been aggressively acquiring stressed assets from banks to clean up their balance sheets.
Industry observers suggest this assignment could pave the way for a comprehensive resolution plan for McLeod Russel, either through a strategic investor or asset monetization. “NARCL’s involvement raises the possibility of faster resolution, given its dedicated focus on resolving legacy stressed assets,” said a senior banker familiar with the transaction.
McLeod Russel, part of the Williamson Magor Group, has been struggling with debt repayment for several years, exacerbated by falling tea prices and high operational costs. Attempts at restructuring, including asset sales and bringing in new investors, have so far failed to stabilize the company’s finances.
For NARCL, this acquisition adds to its growing portfolio of non-performing loans as it looks to fulfill its mandate of resolving ₹2 lakh crore worth of stressed assets in the banking sector. Market participants will be watching closely for the next steps, which could involve either a one-time settlement offer to McLeod Russel’s promoters or sale of the company’s tea estates to recover dues.
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