NARCL acquires Rs 21,350-cr debt of three entities: Govt
The government has informed parliament that the National Asset Reconstruction Company Limited (NARCL) had acquired three borrower entities — Jaypee Infratech Limited, SSA International Limited, and Helios Photo Voltaic Limited — with an aggregate debt exposure of Rs. 21,349 crore.
These assets have been acquired only in the fourth quarter of the financial year 2022-23, and no recovery has been made in these accounts as of 17 July 2023.
The government further informed that in one more account — SPML Infra Limited – the letter of approval for debt acquisition of Rs. 1,994.90 crore has been issued by the lenders, and in-principal approval for the government guarantee has also been issued.
Meanwhile, the government has reiterated that comprehensive measures have been taken by it and the Reserve Bank of India (RBI) to recover the bad debts, enabled by which, scheduled commercial banks have recovered a total amount of Rs. 7.16 lakh crore (RBI provisional data for FY 2022-23) during the last five financial years. These measures include:
(1) Change in credit culture, with IBC fundamentally changing the creditor-borrower relationship, taking away control of the defaulting company from promoters/owners, and debarring wilful defaulters from the resolution process. To make the process more stringent, personal guarantor to corporate debtor has also been brought under the ambit of IBC.
(2) The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 has been amended to make it more effective.
(3) Pecuniary jurisdiction of Debt Recovery Tribunal (DRTs) was increased from Rs 10 lakh to Rs 20 lakh to enable the DRTs to focus on high value cases resulting in higher recovery for the banks and financial institutions.
(4) Public sector banks have created Stressed Asset Management Verticals for stringent recovery, segregated pre- and post-sanction follow-up roles for clean and effective monitoring, and engaging specialised monitoring agencies for monitoring of large[1]value accounts.
(5) NARCL has been set up as an asset reconstruction company with an aim to resolve stressed assets above Rs. 500 crore each. Government has also approved extending a guarantee of up to Rs. 30,600 crore to back security receipts issued by NARCL for acquisition of loan assets from lenders.
(6) Prudential Framework for Resolution of Stressed Assets was issued by RBI in 2019 to provide a framework for early recognition, reporting and time bound resolution of stressed assets, with a build-in incentive to lenders for early adoption of a resolution plan.
Also Read: CCI approves NARCL acquisition of SREI Infrastructure Finance
