5% stake to be acquired by ICICI Bank in NARCL
- ByStartupStory | March 11, 2022
On Friday, ICICI Bank announced that an agreement was signed by the private lender on March 10, 2022 for investment in National Asset Reconstruction Company Limited (NARCL). NARCL is an asset reconstruction company, incorporated on July 7, 2021.
Upto 5% equity holding in NARCL with total cash consideration of up to ₹137.5 crore in tranches will be acquired by the bank. Equity investment expected to be completed by March 31, 2022 would be in tranches with the first tranche of equity investment of ₹704.5 million, announced ICICI Bank in an exchange filing today.
The creation of National Asset Reconstruction Company (NARCL) or bad bank to resolve large cases of stress was announced by Finance Minister Nirmala Sitharaman in her Budget 2021 speech. In order to aggregate and consolidate stressed assets for their subsequent resolution, the NARCL has been set up by banks. About 51% ownership in NARCL will be maintained by Public sector banks (PSBs).
A bad bank is a corporate entity held by banks and financial institutions or a group of banks that alienates illiquid and risky assets. In order to help banks clean their balance sheets by transferring their bad loans it has been created so that the banks can focus on their core business of taking deposits and lending money.
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