PSU banks list assets for sale to NARCL after finance ministry nudge

The government-promoted asset reconstruction company will evaluate accounts of about 300 distressed companies with cumulative loans of Rs 3lakh crore for acquisition this fiscal year, said people aware of the development.

Following a nudge from the finance ministry last fortnight, most government-owned banks identified companies they would prefer to sell to National Asset Reconstruction Company (NARCL), the people cited above said. NARCL will identify about 20-25 accounts from the list for acquisition this fiscal year.

The list includes Videocon Industries, Future Retail, Future Enterprises, GTL, Visa Steel, Kwality, Gayatri Projects, Era Infra, Reid and Taylor India, and Coastal Energen.


During a recent meeting with the CEOs of public sector banks, the finance ministry directed lenders to actively consider the sale of loans NARCL which was set up to help banks clean their books.

In recent weeks, NARCL has offered to acquire Vidarbha Industries for Rs 1,150 crore, Rolta for Rs 600 crore and VOVL for Rs 1,100 crore.

Lenders are in the advanced stage of concluding the documentation for Dharani Sugars and Chemicals, for which the NARCL was declared the winning bidder at an uncontested Swiss challenge auction. It offered Rs 222.5 crore for the purchase of Rs 619 crore loans.

Rainbow Papers is the next loan to be auctioned wherein NARCL has given Rs 87 crore anchor offer for Rs 1,136 crore loans.

This year, NARCL is expected to accelerate the acquisition of loans as it has gained expertise after being in operation for over a year now.

Last financial year, it missed its self-imposed target of buying ₹50,000 crore loans during the initial teething problems for operating a newly formed ARC.

In FY23, NARCL acquired Rs 10,378 crore loans of three companies - Jaypee Infratech, SSA International and Helios Photo Voltaic. All three loans were acquired for Rs 3,636 crore through a combination of cash and security receipts.

NARCL had given binding bids for many companies, but some of the offers were rejected, while in some cases, lenders received improved counter offers.

For instance, lenders rejected the Rs 360 crore offer for GTL since it was below their expectations. Lenders were seeking Rs 550 crore from the ARC. Similarly, they plan to sell McNally Bharat loans to Nalwa Steel, who offered Rs 424.2 crore last week. It also offered Rs 228 crore to acquire Mittal Corp, but lenders sold the loans to Phoenix ARC, who gave an improved counteroffer of Rs 405 crore.

All the offers by NARCL have a 15:85 structure - 15% of the consideration is paid upfront, and the remaining 85% is paid on the recovery of dues. The government guarantees any shortfall in the promised recovery as announced in the budget for FY21.