Banks likely to sell Rs 1 lakh crore of fraudulent loans to NARCL after RBI nod


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New Delhi: Banks likely to sell fraudulent loans worth nearly Rs 1 lakh crore to National Asset Reconstruction Company Ltd (NARCL) and other CRAs after Reserve Bank of India clears lenders to sell such loans, the Economic times mentioned in a report citing industry estimates.

According to RBI data, banks have reported loan frauds amounting to Rs 3.95 lakh crore over the past three years. The banks’ decision should help NARCL meet its goal of acquiring Rs 2 lakh crore in loans.

Last week, banks and asset managers sought central bank approval to allow the sale of those accounts to asset rebuilding companies, which the banking regulator was opposed to.

“These high value loans that have large banking consortia are likely to be transferred to NARCL. The new RBI rules will help NARCL identify their remaining kitten, ”the publication said, citing a banker with knowledge of the matter. “Because there is a government guarantee, banks do not have to fully provide loans that are not covered by a full allowance, unlike an additional allowance to sell to CRAs. “

NARCL, which has an acquisition target of Rs 2 lakh crore, has already identified loans worth Rs 89,000 crore. The government has given a guarantee of almost Rs 31,000 crore on these bad debts.

Stakeholders believe that since there has been negligible recovery in cases of fraud through the bankruptcy mechanism or debt collection courts, allowing the sale of these accounts to CRAs will generate better returns and will free up capital. “Sales guidelines for Standard Loans and Stressed Loans … have been issued from time to time. These Guidelines on Loan Exposure Transfer repeal 18 existing guidelines, some of which date back to 2003, and provide an integrated regulatory framework, introducing new measures and safeguards aimed at developing a vibrant secondary loan market ”, said declared the financial daily quoted by Hari Hara. Mishra, Director, UV ARC.


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