The National Asset Reconstruction Company (NARCL), known more commonly as India’s bad bank, will make binding offers for the first tranche of accounts within the next couple of weeks, a senior State Bank of India (SBI) executive said on Friday.
Swaminathan J, managing director for risk, compliance and stressed assets resolution, SBI, said that the process of identification of accounts and due diligence is nearly completed. “They are in the final lap of getting the approvals ready in order to make binding offers to the banks. We expect that to be a couple of weeks away,” he said.
Banks intend to transfer stressed assets worth Rs 2 trillion in the first tranche. Once the bad bank makes binding offers, the next step will be for the lead lenders to convene joint lender meetings and then run a Swiss challenge auction with the NARCL’s offers as anchor bids. Other ARCs will have the opportunity to make all-cash offers only as the bad bank’s security receipts (SRs) are backed by the central government. If other bidders participate, NARCL will be given some more time to consider if they want to match the offers.
The plan for asset transfer has been hamstrung by delays related to regulatory concerns about the dual structure of the bad bank as also managerial appointments. NARCL has already missed its March 31, 2022 deadline for acquisition of 15 assets worth Rs 50,000 crore. All the vacancies at NARCL are now set to be filled and the Reserve Bank of India’s (RBI) approvals will be sought wherever required, SBI said on Friday.