Public sector banks like State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, Union Bank of India and Bank of India will be infusing capital and will have stakes in the bad bank.
These Nine banks and two non-bank lenders are likely to invest ₹7,000 crore as initial capital in the bad bank that was proposed in Budget 2021. Meanwhile, private banks like Axis Bank, ICICI Bank and LIC-owned IDBI Bank are also investing in this bank. ICICI Bank, Axis Bank and Life Insurance Corp of India (LIC)-owned IDBI Bank are also among the shareholders.
Other non-banking stakeholders in the new bank will be Power Finance Corporation (PFC) and Rural Electrification Corporation (REC). All 11 entities will hold around 9% share in the bad bank.
All the 11 shareholders will hold just above 9% each initially, and this would mean that no single shareholder has more than 10% in promoting stake. More shareholders could join at a later date, which could dilute the stakes further for the existing investors,” the business daily quoted a person familiar with the plan as saying.
Lenders have identified about Rs 2 lakh crore of bad loans for which they expect Rs 40,000-50,000 crore. These assets will be transferred to the new ARC at 15% upfront cash, about the level of capital being infused into the company.
However, the Reserve Bank of India (RBI) wanted this ARC to fit into the existing structure for these companies and after consultations, care has been taken that there is no special treatment for this entity