InvestorQ : In the Bad Bank announcement, what will the NARCL and the IDRCL do? Are both one and the same?
vaishnavi mhatre made post

In the Bad Bank announcement, what will the NARCL and the IDRCL do? Are both one and the same?

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vidhya Laxmi answered.
3 months ago
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They are not the same. While NARCL is the Bad Bank, the IDRCL is more of a supportive role to Bad Bank. Let me talk about NARCL first. The National Asset Reconstruction Company or NARCL will actually take over the stressed assets of banks up to Rs.200,000 crore. It will be an ARC registered with RBI, but will carry government guarantee up to Rs.30,600 crore for SRs. NARCL will pay 15% in cash up-front and 85% in guaranteed security receipts (SRs).

The IDRCL is more of a support function for NARCL. The Indian Debt Resolution Company or IDRCL will assess market value of stressed loan to arrive at NAV payable by NARCL. IDRCL will also take a view on whether to appoint turnaround managers and for getting necessary legal opinion and valuation support. In short, IDRCL will do the spade work and based on this spade work, the NARCL will disburse funds in a mix of 15% cash and 85% SRs.

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