National Asset Reconstruction Company

National Asset Reconstruction Company Limited (NARCL) is a government-backed entity established on July 7, 2021, to acquire and resolve large-value Non-Performing Assets (NPAs) from the Indian banking system. Announced in the Union Budget 2021, it is commonly referred to as India's "bad bank" and was created to clean up legacy stressed assets, specifically those with an exposure of ₹500 crore and above. Public Sector Banks (PSBs) hold a majority 51% stake in NARCL, with the remaining shares held by private banks; Canara Bank is the sponsor bank.

NARCL operates in a dual structure with the India Debt Resolution Company Limited (IDRCL), an asset management company. NARCL acquires the stressed assets from banks, while IDRCL, which is majority-owned by private lenders, manages the resolution process. The business model involves NARCL purchasing NPAs from banks by paying 15% of the agreed value in cash upfront and issuing government-guaranteed "Security Receipts" (SRs) for the remaining 85%. This structure is backed by a government guarantee of up to ₹30,600 crore, which can be invoked if the resolution of the assets results in a shortfall. This mechanism incentivizes quicker action from banks, frees up their capital and management resources to focus on new credit growth, and improves their balance sheets.

The company is led by Chairman Diwakar Gupta, a former MD & CFO at the State Bank of India, and MD & CEO P. Santhosh, a former Chief General Manager of Canara Bank with extensive experience in stressed asset resolution. Since commencing operations, NARCL has been actively acquiring portfolios of stressed loans and is targeting the acquisition of ₹2 trillion in such assets by FY26.

Keywords: non-performing assets, asset reconstruction, stressed assets, debt resolution, bad bank, Indian banking system, NPA resolution, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, security receipts, India Debt Resolution Company Limited, Canara Bank, large corporate loans, debt recovery, financial asset acquisition, loan restructuring, insolvency proceedings, corporate debt, public sector banks