“His name has now being proposed to head the new company after SBI also gave its no objection to the appointment on Tuesday,” said one of the persons cited above. Nair was promoted as CGM in SBI’s stressed asset resolution group (SARG) last year after spending more than three years in the department managing bad loans for the bank. His experience with the scale of bad loans managed by SBI resulted in his selection another person cited above said. “He had clear thoughts and ideas to be implemented.
To manage stressed assets one has to know the history of the asset in order to get the best value and the committee was impressed by his suggestions,” said the second person. Lenders have identified about Rs 2 lakh crore of bad loans for which they expect Rs 40,000-50,000 crore of recovery. These assets will be transferred to the new ARC at 15% upfront cash, about the level of capital being infused into the company.
Already banks have individually cleared Rs 1 lakh crore of legacy bad loand which carry a 100% provision and hence can be transferred to the new NARC immediately. Nair will be on deputation from SBI for the first few months till the company completes its regulatory process to start operations. He will resign from SBI and join as CEO after the company starts operations most likely in the next couple of months. Nine banks and two non-bank lenders, including the State Bank of India (SBI),
(PNB) and (BoB), are coming together to jointly invest Rs 7,000 crore of initial capital in a proposed bad bank that aims to help extract funds stuck in bad loans. Two other state-run financiers of power projects will also own stock in the bad bank, ET had reported in February.
Canara Bank, Union Bank of India and Bank of India will join their larger state-run peers as investors in the bad bank. ICICI Bank, Axis Bank and Life Insurance Corp of India (LIC)-owned
are also among the shareholders. State-owned Power Finance Corp (PFC) and Rural Electrification Corp (REC) will also be equal shareholders in the new company.
The NARC will aggregate the bad loans and transfer them to a step-down asset management company (AMC) which will manage the assets for sale. A separate CEO is likely to be appointed for the AMC.