The private sector India Debt Resolution Co (IDRCL) which is helping the public sector bad bank resolve non-performing assets (NPAs), will take some additional time to get going as some shareholders are to onboard. The reason behind this is that private-sector lenders HDFC Bank, Axis Bank, and ICICI Bank, which aim to hold a big part of IDRCL’s capital are considered as foreign entities under the law and thus need approval from the government for the investment.
The bad bank proposal which was announced in the February 2021 Budget; envisages NARCL that will acquire bad loans from banks. The time these loans were aggregated from multiple lenders, they would be resolved with private sector expertise from IDRCL.
The Reserve Bank of India has given nod to the private banks to invest in IDRCL, but foreign investment norms make it mandatory for them to get a government’s approval as well. HDFC Bank, Axis Bank, and ICICI Bank are predominantly owned by foreign investors.
