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After a much delay, lenders, led by IDBI Bank, have transferred the first large stressed account to the National Asset Reconstruction Company (NARCL), last week.
The bad loan transferred to NARCL, or bad bank, is Jaypee Infratech, which was among the 12 large accounts referred by the Reserve Bank of India (RBI) to the National Company Law tribunal (NCLT) in 2017.
“Previous Friday, one account has already been done (transferred to NARCL). We were the lead bank in this account,” IDBI Bank Managing Director and CEO Rakesh Sharma said on Monday.
The bank’s recovery in the account is close to 45 per cent.
While the total exposure of all the banks to Jaypee Infratech was over Rs 9,000 crore, IDBI Bank’s exposure was Rs 3,750 crore.
Sharma said the bank in total had identified Rs 10,000-11,000 crore of bad loans, including JP Infratech, to transfer to NARCL. In the quarter ended December 2022, the bank’s gross NPA declined to 13.82 per cent from 21.68 per cent.
He said the bank expects an overall reduction of 4 per cent in GNPAs once all the identified accounts are transferred to NARCL.
The transfer of Jaypee Infratech alone will bring down the GNPA ratio by 2.2 per cent, Sharma said.
Finance Minister Nirmala Sitharaman, in the Budget 2021-22, had announced the setting up of a bad bank as part of the resolution of stressed loans in the banking system.
NARCL will acquire assets on a 15:85 ratio of cash and security receipts (SRs).
SRs, which are issued in favour of the transferring lenders, are secured by government guarantee for its face value.
In the same quarter, IDBI Bank’s net profit jumped by 60 per cent to Rs 927 crore from Rs 578 crore in the year-ago period.
The rise in profit was driven by net interest income,increasing by 23 per cent to Rs 2,925 crore from Rs 2,383 crore in the third quarter of the previous fiscal.
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