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Public Sector Banks Transfer Rs. 11,000 crore NPA to NARCL, MoS Finance Informs Parliament
10 PSBs transfer Rs. 11,617 crore NPAs to NARCL; the bad bank recovers Rs. 16.64 crore, utilising security receipts and insolvency processes.
Author: Saurav Kumar
Published: December 13, 2023
In a significant move toward tackling Non-Performing Assets (NPAs), 10 Public Sector Banks (PSBs) have collectively transferred over Rs. 11,617 crore of NPAs to the National Asset Reconstruction Company Ltd (NARCL) between January and November this year. On December 12, Minister of State for Finance, Dr. Bhagwat Karad, replying to question no. 1044 revealed in a Rajya Sabha that NARCL has successfully recovered Rs. 16.64 crore as of November 30, 2023.
Karad said that the recovery process for NPA accounts is an ongoing endeavour. The security receipts, backed by a government guarantee, issued to lenders by NARCL provide a five-year time frame for effecting recovery in such accounts.
He further highlighted that the corporate insolvency resolution process under the Insolvency and Bankruptcy Code is underway for some of the accounts acquired by NARCL. The recovery will be implemented once the resolution plans receive approval from the National Company Law Tribunal. In the remaining accounts, NARCL has achieved a recovery of Rs. 16.64 crore.
NARCL was formed in 2021 as an Asset Reconstruction Company (ARC) to aggregate and consolidate stressed assets for banks.
Top 3 PSBs with NPA
According to the data provided by the MoS Finance, out of 12 PSBs, State Bank of India (SBI) leads the NPA list with Rs. 86,974 crore followed by Punjab National Bank (PNB) with Rs. 65,563 crore, and Union Bank of India (UBI) with Rs. 54,012 crore.
Picture: Data of NPA across 12 Public Sector Banks
SBI Tops in NPA Transfer
Picture: Data on Debt Assigned by Public Sector Banks to NARCL
NARCL, often referred to as a "bad bank," specialises in acquiring NPAs or bad loans from lenders. The latest data on debt assigned to NARCL by the 10 PSBs reveals that the State Bank of India (SBI) leads the pack with a transfer of Rs. 4,508 crore, followed by Punjab National Bank (PNB) and Canara Bank at Rs. 2,138 crore and Rs. 1,858 crore, respectively.
Union Bank of India also made significant contributions, transferring Rs. 1,831 crore to NARCL between January and November. The list of participating PSBs includes Bank of Baroda, Bank of India, Bank of Maharashtra, Central Bank, Indian Bank, and Indian Overseas Bank.
As of September 30, 2023, these 10 PSBs collectively held gross NPAs exceeding Rs. 3.65 lakh crore.