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IBA moves to secure RBI nod to set up bad bank

The Indian Banks’ Association (IBA) is expected to move an application before the Reserve Bank of India to set up the proposed Rs 60 billion National Asset Reconstruction Company (NARCL) or bad bank. IBA has already secured permission from the Registrar of Companies to set up the entity. With registration of the company, the process for putting an initial capital of Rs 1 billion is on according to the guidelines. The initial capital would come from 8 banks who have committed, and the NARCL would expand the capital base to Rs 60 billion. Other equity partners would join after the RBI’s licence and even the board would be expanded. IBA has already set up a preliminary board for the proposed bad bank with an SBI veteran P.M. Nair, a stressed assets expert, as Managing Director. The other directors on the board are IBA Chief Executive Sunil Mehta, SBI Deputy Managing Director S. S. Nair and Canara Bank’s Chief General Manager Ajit Krishnan Nair.

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