ICICI Bank will acquire 5% stake in National Asset Reconstruction Company Ltd (NARCL).

On March 10, 2020, ICICI Bank signed an agreement with NARCL to acquire for Rs 137.5 crore a stake of up to 5% in NARCL. The asset reconstruction was incorporated on July 7, 2021.

Equity investment would be in tranches with the first investment of Rs 70.45 crore expected by March 31, 2022, ICICI Bank said in a regulatory filing.

Finance Minister Nirmala Sitharaman in her Budget 2021-22 speech had announced that the government intends to set up a bad bank as part of the resolution of bad loans worth about Rs 2 lakh crore in the banking system.

Banks have agreed to transfer 15 accounts with approximately Rs 50,000 crore outstanding to the NARCL in the first phase by the end of the current financial year.

Banks have already identified 38 large stressed accounts worth Rs 82,845 crore to be transferred to the NARCL in phases. The proposal is to transfer Rs 50,000 in the first phase and then oversee the resolution before transferring more loans to the bad bank.

The earlier plan was to transfer Rs 2 trillion of non-performing loans but since many resolutions took place in the past year, the amount was scaled down.