Mumbai: With the incorporation of the National Asset Reconstruction Company Ltd (NARCL) the long-standing wait for India’s ‘bad bank’ has come to an end. The company has been registered with the Registrar of Companies (RoC), Mumbai with a paid-up capital of Rs 74.6 crore, as per an RoC filing.

NARCL is headed by Padma Kumar Madhavan Nair, a former SBI executive, as its MD and CEO. The other Directors include SBI Deputy Managing Director Salee Sukumaran Nair, Canara Banks’ Ajit Krishnan Nair, and Indian Banks’ Association (IBA) chief Sunil Mehta. The asset reconstruction company is a major initiative by the government in its move to clean up the banking sector.

Due to the pandemic, the government decided to come up with a ‘bad bank’ to take over the stressed assets of the lenders. Presenting the Union Budget for 2021-22, Finance Minister Nirmala Sitharaman had said that an Asset Reconstruction Company and an Asset Management Company will be set up to consolidate and take over the existing stressed debt.

The ARC and AMC will then manage and dispose of the assets to Alternate Investment Funds and other potential investors for eventual value realization.

Finance Minister Nirmala Sitharaman had said that the high level of provisioning by public sector banks of their stressed assets calls for measures to clean up the bank books.