Government guarantee of Rs 30,600 crore approved for bad bank, cabinet approved

 The government has approved a guarantee of Rs 30,600 crore for security receipts issued by the National Asset Reconstruction Company Limited (Bad Bank). Finance Minister Nirmala Sitharaman said on Thursday that the Union Cabinet has approved the proposal.


The government has approved a guarantee of Rs 30,600 crore for security receipts issued by the National Asset Reconstruction Company Limited (Bad Bank). Finance Minister Nirmala Sitharaman said on Thursday that the Union Cabinet has approved the proposal.

In a press conference, Finance Minister Nirmala Sitharaman said that along with National Asset Reconstruction Company Limited, we are also setting up India Debt Resolution Company Limited. Public sector banks will have 51 per cent stake in NARCL. At the same time, the stake of Public Financial Institutions will be 49 percent. He said that in the last 6 financial years, banks have recovered Rs 501479 crore. Out of this, Rs 3.1 lakh crore has been recovered after March 2018. 1.2 lakh crores in 2018-19 Rs 1.2 lakh crores were recovered. These also include return of money. During this period, the written off loans of companies like Bhushan Steel and Essar Steel were also recovered. The Finance Minister said that the government guarantee will give more confidence to the banks to sell their assets to NARCL.

He said that the government has constituted 6 new DRTs (Debt Recovery Tribunals) for speedy resolution of loans. Along with this, India Debt Resolution Company Limited is also being formed. In this, 49 per cent stake will be held by public sector banks and the rest will be held by private banks. The Reserve Bank is in the process of issuing ARC licences. The Finance Minister said that in 2017-18, the government had infused capital of 90 thousand crore rupees in banks. In 2018-19, this amount was Rs 1.06 lakh crore. Similarly, 70 thousand crore rupees were deposited in banks in 2019-20 and 20 thousand crore rupees in 2020-21. In this financial year also, there is a plan to put 20 thousand crore rupees in banks.

The Finance Minister had announced the establishment of bad banks in the budget speech of 2021-22. He had said that an asset reconstruction company and asset management company would be set up to take care of stressed loans.