SBI, BoB, PNB, UBI, Canara Bank and BoM acquires stake in IDRCL

SBI, BoB, PNB, UBI, Canara Bank and BoM acquires stake in IDRCL
  • State Bank of India (SBI), Bank of Baroda (BoB), Punjab National Bank (PNB), Union Bank of India (UBI), Canara Bank, and Bank of Maharashtra (BoM) have announced their subscription to the shares of India Debt Resolution Company Ltd (IDRCL).
  • The stakes acquired by these banks is given in the table below. The Banks will further reduce their stake in IDRCL that is also given in the tavle below:
Name of Bank Stake acquired Reduces stake by March 31, 2022
State Bank of India (SBI) 12.30% 5%
Bank of Baroda (BoB) 12.30% 9.90%
Punjab National Bank (PNB) 11.18% 5%
Union Bank of India (UBI) 12.30% 10%
Canara Bank 14.90% 5%
Bank of Maharashtra (BoM) 6.21% 4%
  • Public Sector Banks (PSBs) and Public FIs will hold a maximum of 49% in stake of IDRCL while the remaining stake will be with private sector lenders.
  • The NARCL has been incorporated under the Companies Act, and public sector banks will hold 51 percent in NARCL. 
  • Objective of IDRCL: India Debt Resolution Company Ltd (IDRCL) and National Asset Reconstruction Company Ltd (NARCL) have been setup by banks and financial institutions to consolidate and take over the existing stressed debt in the banking/ financial system and then manage and dispose the assets to Alternate Investment Funds.

Points to remember:

  1. The maximum stake of Public sector banks in IDRCL?= 49%
  2. The maximum stake of Public Sector Banks in NARCL?= 51%
  3. Which bank has recently acquired the highest stake in IRDCL?= Canara Bank= 14.90%

Source: The Hindu Business Line

Extra Info: The NARCL will acquire assets by making an offer to the lead bank. Once NARCL’s offer is accepted, then, IDRCL will be engaged for management and value addition.

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