NARCL Names Diwakar Gupta As Chairman
Diwakar Gupta, the former Managing Director of the State Bank of India (SBI), is set to take charge of Chairman at the National Asset Reconstruction Company Limited (NARCL).
The government-backed bad loan aggregator NARCL is going to appoint Gupta after the Reserve Bank of India (RBI) approved his nomination late last week, said three people aware of the matter.
Gupta, who was now discharging his duties as the chairman of the bad bank's agent, India Debt Resolution (IDRCL), is going to resign from the post to take charge at NARCL in the first week of December, the people pointed out.
One of the persons, who did not wish to be identified, said that the RBI had given its approval a couple of days ago for Gupta to take charge of NARCL. His name was proposed due to his immense experience. There are also expectations from him that he will get things moving because neither the government nor banks are happy with the speed of resolutions in NARCL. This move is an attempt to change that continuity.
Gupta has refused to comment on the matter. NARCL CEO Natarajan Sundar also had not replied to an email seeking comment.
The NARCL has been able to conclude the acquisition of merely six companies since it started operations in January 2022 to house banking sector advances that had become bad loans. SPML Infra, Dharani Sugars and Parenteral Drugs were acquired by NARCL in this fiscal year, followed by SSA International, Jaypee Infratech and Helios Photovoltaic which were acquired in the last financial year.
The total debt acquired by NARCL now stands at Rs 14,166 crore which is far from less than the estimated target of Rs 82,845 crore target set by SBI chairman Dinesh Khara in January 2022, of which Rs 50,335 crore was to be transferred till the end of 2021-22.
But the bad bank is running far behind schedules which is leading to delays in the government guarantee renewal, along with the lack of consensus on the best price for assets among banks, NARCL and its primary agent IDRCL.
The NARCL usually acquires bad loans from the banks by an upfront value of 15 per cent of the amount in cash and the remaining in security receipts, which are to be matched with recovery over time. These security receipts offered a guarantee from the government, valid for five years which can be invoked by banks in case of resolution or liquidation of the bad loan. They are used to cover the difference between the face value of security receipts issued and the actual realisation of the amount when the NARCL finds a buyer, which is the main feature for the government-backed bad bank.
