PNB sells entire stake in ARCIL to Avenue India Resurgence
The PSU lender has sold its entire 10.01% stake in the asset reconstruction company in a cash transaction.
The PSU lender has sold its entire 10.01% stake in the asset reconstruction company in a cash transaction.
The ARCs, the quintessential bad banks, can help the commercial banks focus on underwriting good loans, supporting GDP growth.
According to a BofA Securities report, the Covid-19 shock could delay India touching the GDP of Japan by three years. In their latest estimates, it will now happen by 2031 if the economy grows at 9%.
Asset reconstruction companies (ARCs) were set up in India to solve the NPA problem. India's 29 ARCs are a reflection of the success of the ecosystem in alleviating the stressed asset challenges.
Apart from recapitalisation, public sector banks get a shot in the arm in the form of ARC and AMC mechanisms to clean up their books.
The magnitude of stressed assets piled up with PSBs raises questions on the rationale and funding of such an ARC/AMC.