Lok Sabha Question No. 207 (STARRED), answered on 2021-12-13
Subject: Establishment of NARCL
Ministry: FINANCE
Asked by: K. Shanmuga Sundaram

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## LOK SABHA STARRED QUESTION NO-*207

ANSWERED ON- 13/12/2021

## ESTABLISHMENT OF NARCL

*207. SHRI SHANMUGA SUNDARAM K

Will the Minister of FINANCE be pleased to state:-

- (a) whether the Government is any   proposal to establish National Asset Reconstruction Company Limited (NARCL) as announced by the Finance Minister in Budget speech; having
- (6) if s0, the value of the estimated strained assets with various Public Sector Banks and the quantum of strained assets to be taken over by the proposed asset management company;
- whether partially provided accounts by banks will be taken into consideration by NARCL and ifnot; the reasons therefor;
- d) the details of the compensation method and amount to be transferred to the banks which transferred the strained assets to NARCL; and
- (e) whether the Government is providing any   guarantee to the proposed asset management company and if the details thereof with the amount of guarantee to be given? along SO,

## ANSWER

## THE FINANCE MINISTER

(SMT. NIRMALA SITHARAMAN)

- (a) to (e): A statement is laid on the Table of the House:

Xxxxx

Statement as referred to in reply of Lok Sabha Starred Question no. *207 for answer 0n 13th December, 2021/ Agrahayana 22, 1943 (Saka) regarding "Establishment of NARCL" by SHRI SHANMUGA SUNDARAM K, Hon'ble Member of Parliament a) to (e): Pursuant to the Finance Minister' $ for the financial year 2021-22, National Asset Reconstruction Company Limited (ARCL) has been set up by banks and Certificate of Registration for commencement of business of securitisation of asset reconstruction operations has been by Reserve Bank of India (RBI) on 4.10.2021. Budget speech granted

As per RBI aggregate gross advances of sector banks (PSBs) increased from Rs. 18,19,074 crore as on 31.3.2008 to Rs: 52,15,920 crore as on 31.3.2014. As per RBI inputs, aggressive lending practices this with   wilful  default/loan frauds/corruption in some cases, economic slowdown etc: were observed to be primary reasons for the spurt in the stressed assets Asset Quality Review (AQR) initiated in 2015 for clean and provisioned bank balance-sheets revealed high incidence of NPAs As a result of AQR and subsequent transparent recognition banks, stressed accounts were reclassified as NPAs and expected losses On stressed loans; not provided for earlier under flexibility given to restructured loans, were provided for: Primarily as a result of transparent recognition of stressed assets as NPAs, as per RBI data on global operations, gross NPAs of PSBs rose from Rs. 2,79,016 crore as On 31.3.2015, to Rs. 8,95,601 crore as on 31.3.2018, and as a result of Governments strategy of recognition; resolution; recapitalisation and reforms, have since declined to Rs. 6,12,384 crore as on 30.6.2021. Further; comprehensive steps hare been taken by the Government to recover NPAs, enabled by which; PSBs, as an amount of Rs. 5,49,327 crore the last seven financial years: public data, period along during fully by during

NARCL is intended to resolve stressed assets amounting to about Rs.2 lakh crore\_ These assets include both fully and partially provided accounts Acquisition of assets would be under the extant guidelines whereby through the 15.85 structure; 15 per cent of the net value of assets is upfront to banks and security receipts (SRs) issued for the remaining 85 per cent: paid

Government has approved guarantee ofup to Rs 30,600 crore for Security Receipts to be issued by NARCL The said guarantee will be valid for five years from the date of issuance of SRs r till the date of final settlement of loan accounts, whichever is earlier: