Indian lenders have shortlisted at least 17 new non-performing accounts for sale to National Asset Reconstruction Co. According to two people in the know, loans worth Rs 93,240 crore are linked to these accounts.
Currently, banks are in the midst of discussions to finalise these accounts for sale. Once these discussions are completed, NARCL will be invited to submit bids for these accounts, the people said on the condition of anonymity.
The loan accounts involved in this list include Srei Infrastructure Finance Ltd., Srei Equipment Finance Ltd., Future Retail Ltd., Future Enterprises Ltd., Jaiprakash Associates Ltd. and Jaypee Cement Corp., the people quoted above said. State Bank of India is the largest lender for most of these accounts.
According to the first of the two people quoted above, the new list of stressed accounts has been finalised, since the first list of 15 accounts shortlisted in February are yet to be sold to NARCL. The first list included Videocon Oil Ventures Ltd., Jaypee Infratech Ltd., Visa Steel Ltd., Meenkashi Steel Ltd., Rainbow Papers Ltd. Loans worth over Rs 50,000 crore are linked to these 15 accounts.
Of the first list, NARCL has submitted formal bids for Rainbow Papers Ltd. and Consolidated Construction Consortium Ltd. for now, but banks are yet to approve the sale. According to the second person quoted above, NARCL has promised only 2-10% recoveries in its bids, which is not enough for banks to go ahead with the sale.
The delays have meant that NARCL is yet to officially begin any resolution work. Delays in resolution lead to lower recoveries from stressed accounts. While banks had first aimed to transfer the 15 accounts by March 31, the deadline was later moved to June 30. This, too, was missed.
The Ministry of Finance has summoned major bankers and officials of the NARCL for a meeting next week to discuss the reasons for the delays. Over the last month, the ministry has been regularly sending memos to bankers asking for explanations regarding the delays, the second person quoted above said.
Queries emailed to NARCL, State Bank of India, and the finance ministry were not immediately answered.
The NARCL is India’s version of a bad bank that aims to consolidate bad loans from lenders and resolve them through a debt management firm. Under the structure, NARCL would pay 15% of the net asset value of bad loans in cash and issue security receipts for the rest of the value. Net asset value refers to the value of the loan account, after adjusting for the provisions made by banks.
In September 2021, the government had approved guarantees worth Rs 30,600 crore for security receipts to be issued by NARCL to banks.