Punjab National Bank to buy stake in NARCL

The government-owned Punjab National Bank (PNB) will acquire a stake in the soon-to-be-set-up National Asset Reconstruction Company Limited (NARCL). PNB has already identified non-performing assets (NPAs) worth Rs 80 billion to be transferred to the proposed bad bank for resolution. Formally proposed in Union Budget 2021-22, the bad bank will take over large bad assets or loans worth over Rs 5 billion from lenders for resolution. This will help public sector banks clean their balance sheets faster. The promoters of NARCL are likely to be power finance companies, with public sector banks holding the remaining equity stake in the bad bank. Approximately Rs 840 billion worth of NPAs have been identified, mostly by public sector banks, for transfer to NARCL. In the first tranche, PNB alone has identified roughly Rs 80 billion worth of loans to be transferred. Overall, NARCL will seek to resolve stressed assets worth Rs 2 trillion-Rs 2.5 trillion in around 70 large accounts.