Mumbai: Government-backed bad bank, the National Asset Reconstruction Co (NARCL), has finalised nine transactions worth more than ₹24,000 crore in bank debt in the last work week of FY24, people aware of the developments said, pointing to a frenetic pace of deal making after a relative lull through virtually the entire second half of the fiscal year ending Sunday. Over the past four days, it has completed the transfer of six accounts.
The NARCL made the upfront payments and issued the necessary security receipts (SRs) guaranteed by the government for the six accounts with a total debt count of Rs 9,415 crore.
“Banks have so far received the cash and the SRs guaranteed by the government in the last couple of days for six accounts,” said a banker aware of the details. “The documentation and guarantees are being issued on the remaining three accounts on Friday, and the process could be completed on Saturday.”
Another three accounts with debt of Rs 14,237 crore are also set to be transferred Saturday, the last working day of the fiscal year ending March 31.
With these acquisitions, the total debt held by NARCL will almost double to Rs 48,652 crore, up from the Rs 25,000 crore acquired by the bad bank so far. However, it is still not close to the Rs 82,845-crore target set in 2022.
Since it started operations in January 2022, NARCL has faced multiple organisational, structural and bureaucratic challenges that have delayed acquisitions of bad loans, negating the purpose of this bank-funded organisation that’s supported by the state.
“These acquisitions are the first after the change in management in the NARCL,” said a second person aware of the transactions. “One can only hope that banks see some recovery from the SRs issued and do not have to rely on the government guarantee.”
All but one of the six accounts already transferred this week are road assets. These are Rohtak Hissar Tollway (Rs 1,003 crore), Pink City Expressway (Rs 1,800 crore), Haridwar Highway (Rs 750 crore), SEW LSY Highway Rs 622 crore) and Hitodi Infra (Rs 2,200 crore).
Aluminum company Metenere is the only non-road asset in the bunch, but with the highest outstanding debt of Rs 3,040 crore.
Three other companies -- Simplex Infrastructures, Rohtak Panipat Tollways (Rs 874 crore) and Wind World India (Rs 3,763 crore) -- are set to be transferred to NARCL on Saturday. Simplex Infrastructures is the largest debt to be acquired by NARCL in this round, with a total outstanding of Rs 9,600 crore.
Simplex is also the largest case to be transferred to the bad bank since the latter took over the Rs 9,234 crore debt of Jaypee Infratech in January 2023 in its first acquisition. NARCL buys distressed loans at 15% cash, with SRs issued for the remaining 85%. For the SRs, the government has approved a five-year guarantee of Rs 30,600 crore, which will backstop banks in the case of lower realisation from that envisaged during the initial deal.
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