| IDBI chief P. P. Vora (centre) with CII (ER) chairman Sanjay Budhia (extreme right) and former chairman Dipankar Chatterjee in Calcutta on Wednesday. Picture by Kishor Roy Chowdhury
Calcutta, Aug. 13: The three main promoters of Asset Reconstruction Company India Limited (ARCIL) — IDBI, ICICI Bank and State Bank of India — will transfer sticky assets worth Rs 7,000 crore to the company in the first phase.
While IDBI will transfer Rs 2,000 crore, the rest will come from State Bank of India and ICICI Bank. All these three institutions hold a 24.5 per cent stake each in ARCIL.
The asset reconstruction company will issue security receipts to the three financial institutions against these sticky assets after proper valuation. These security receipts will be tradable and ARCIL will come out with their NAV (net asset value) on a regular basis.
“We have applied to the Reserve Bank of India for registration of ARCIL. We expect to get it soon,” said P. P. Vora, chairman and managing director of IDBI. He was speaking on the sidelines of a seminar ‘Banking East’ organised by the Confederation of Indian Industry.
Vora said that whatever security receipts the banks and financial institutions will get from this asset transfer to ARCIL will help them in provisioning against the non-performing assets in their books of accounts.
IDBI will transfer assets of 11 companies to ARCIL. “Only large cases would be transferred in the initial stages,” he said.
R. Kakkar, managing director of ARCIL, said they have divided the NPAs into four groups. Group-I assets would be the NPAs of those companies where there is no need to change the promoters and loans would be restructured.
The group-II would be NPAs where the ARCIL believes that the company can be merged with another entity. In the case of group–III, the unit can be made viable through a change of management. And in the case of group-IV assets, ARCIL would proceed with the liquidation of the company.
ICICI Bank executive director Kalpana Morparia, who attended the banking seminar, said one-third of Rs 7,000 crore that will be transfered to ARCIL will come from the bank.
ICICI Bank asset sale
ICICI Bank will sell securitised assets worth Rs 2,500 crore in the current fiscal, Morpariasaid.
The bank has given retail advance worth Rs 20,000 crore in the first quarter. This will go up to Rs 30,000 crore in 2003-04. The bank has aimed to give advances of Rs 75,000 this fiscal.