Sunday, October 24, 2021

Cabinet approves govt guarantee up to Rs 30,600 crore to back Security Receipts to be issued by NARCL: FM Sitharaman

Finance Minister Nirmala Sitharaman has said that the Union Cabinet on Wednesday approved government guarantee up to 30,600 crore rupees to back Security Receipts to be issued by National Asset Reconstruction Company Limited, NARCL. Briefing media in New Delhi on the Cabinet decisions this evening, Ms Sitharaman said, Budget-2021 had announced government’s intention to set up an Asset Reconstruction Company along with Asset Management Company to consolidate and take over existing stressed debt and thereafter manage and dispose them off to buyers for value realization. She said, Banks’ asset quality review had happened in 2015, for cleaning up and fully provisioning bank balance sheets, this revealed very high incidence of Non-Performing Assets, NPAs.

The Minister said, the government then came up with 4R strategy of Recognition, Resolution, Recapitalisation and Reforms. She said, after recognition, quantification of NPAs started in a planned manner and recovery too started. She added that in last six financial years, the 4Rs were executed meticulously and banks have recovered five lakh one thousand 479 crore rupees. Ms. Sitharaman said, Fugitive Economic Offenders Act of 2018 is showing a lot of results. She said, in 2018, just two of the 21 Public Sector Banks were profitable. She expressed happiness that in 2020-21, only two reported loss for the year. The Minister said, Public Sector Banks are now not only making profits, they are also raising money from the markets, a total of 58,697 crore rupees has been raised by Public Sector Banks as debt and equity. She said, National Asset Reconstruction Company Limited will aggregate NPAs in banks’ balance sheets for which full provisioning has been done and manage and dispose of them professionally, this will thus clean up banks’ balance sheets.

The Minister said, along with NARCL, government is also setting up an India Debt Resolution Company Limited. She said, PSBs will have 51 per cent ownership in NARCL, while PSBs and public financial institutions will have a maximum of 49 per cent stake.

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