National Asset Reconstruction Company Limited (NARCL) has acquired four assets and two in pipeline worth Rs 25,000 crore against the binding offers it made in 30 accounts with debt exposure of Rs 1.70 lac crore (including two accounts with debt exposure of Rs 32,000 crore as a resolution applicant).
The remaining accounts have either been resolved through various resolution mechanisms (IBC / SARFAESI / settlement, etc.) or have been put on hold, Purshotam Agarwal, Chief Investment Officer at NARCL wrote in the latest newsletter of the Association of ARCs in India.
Furthermore, another 30 accounts with debt exposure of Rs 70,000 crore are at different stages of evaluation.
Since inception, lenders have referred 125 accounts with debt exposure of Rs 3.5 lakh crore for evaluation to NARCL. To date.
“During the maiden year of operations, processes have since been streamlined to a large extent. Considering the unique structure of the twin companies for managing the assets, it is natural that it took time to put in place systems and procedures to support the workflow process.
The reasons
He noted that the key reasons for lower-than-expected conversion included selling lenders’ reluctance to accept SRs and wait through the resolution period, apprehensions in value mismatch in offers given by NARCL, upside sharing not factored in a while comparing NARCL offer with a cash offer, time taken in negotiation for value with NARCL before putting up the account under the Swiss Challenge Process.
The other reasons, he said, were inter se lenders security issues, delays in lenders granting individual approvals, and developments in other resolution strategies undertaken by the lenders (viz regularisation of the account by borrowers, restructuring, settlement with promoters, resolution under IBC, etc).
Market making and way ahead
“NARCL has played a catalytic role in rejuvenating the market for large legacy NPAs. As part of the mandate to clean up the NPAs from the banking system, NARCL is providing binding offers for all types of assets. A sector-agnostic as well as situation-agnostic approach is being followed while evaluating the assets for acquisition,” Agarwal wrote.
