Canara Bank To Be Lead Sponsor And Shareholder Of Bad Bank- PNB, SBI, And Others To Hold Equity Stakes
- ByStartupStory | June 14, 2021
Government-owned Canara Bank will be the lead sponsor and shareholder of the Government’s upcoming bad bank, National Asset Reconstruction Company Limited (NARCL). Up to 12% equity to the entity will be contributed by Canara Bank and will most likely be dominated by the public sector banks. Besides Canara bank, all the equity investors will hold less than 10 % to ensure a diversified ownership pattern.
It should be taken into consideration that the NARCL will come into existence later this month itself. As stated on the initial plan, 11 the shareholders were expected to just above 9% stake each. Under the contours of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act NARCL has been formed which mandates at least one sponsor. Furthermore, the Reserve Bank of India (RBI)’s protocols mandates that a bank cannot be a sponsor in more than one asset reconstruction company. In this context, Canara Bank fits into the bill.
Meanwhile, Punjab National Bank, the State Bank of India Bank of Baroda, and the Union Bank of India have an equity stake in the NARCL.
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