Canara Bank has acquired 14.9% of India Debt Resolution Company Ltd (IDRCL) while Bank of Baroda has picked up 12.3% stake in the asset reconstruction company.

Bank of Baroda said on Friday that it subscribed to 99,000 shares of India Debt Resolution Company Ltd (IDRCL). Canara Bank, on the other hand, has subscribed to 1.2 lakh equity shares. 

Bank of Baroda will cut its stake in IDRCL to 9.9% and Canara Bank to 5% by March 31, 2022.

In the new structure for a bad bank, the Reserve Bank of India (RBI) has approved the setting up of the National Asset Reconstruction Company Ltd (NARCL) to acquire and aggregate the bad loan accounts from banks. IDRCL, on the other hand, will handle the resolution process under an exclusive arrangement.

As per the structure, public sector Banks (PSBs) will hold a maximum of 49% stake in IDRCL while the remaining stake will be with private sector lenders.

The other banks who are going to be shareholders are Punjab National Bank, Bank of India, Bank of Maharashtra, State Bank of India, Union Bank of India, Indian Bank and IDBI Bank.

IDRCL is expected to improve resolution techniques, preserve value, showcase the brownfield assets and attract investors and alternative investment funds.