NARCL chairman Pradip Shah quit before RBI nod: State Bank of India

Pradip Shah, who had taken charge as the chairman of National Asset Reconstruction Co Ltd (NARCL), stepped down before the Reserve Bank of India (RBI) could approve the proposal, State Bank of India (SBI) said.

Shah, a financial sector veteran, took charge of the NARCL soon after the debt recast firm received the licence from the RBI.

According to sources familiar to the development, NARCL sought the RBI’s approval for appointing four directors. The application also indicated Shah's role as the chairman of the board.

“Directors’ appointment is one among the many appro­vals that an ARC requires prior to commencing business,” SBI said in a statement.

NARCL has been set up by banks to aggregate and consolidate stressed assets for their subsequent resolution. SBI, along with other public sector banks will have 51 per cent stake in NARCL, the government had said.

“While these requests were under process, Mr Pradip Shah stepped down from the NARCL Board. The RBI approval, therefore, was received only for the remaining directors. The factual position is that Mr Pradip Shah happened to step down prior to receipt of the RBI approval,” the statement said.

Sources said the RBI approval for the four candidates were sought on January 21, 2022. Shah stepped down from the post on January 28.

“RBI wanted some more time, some more background check was required,” said a source, requesting anonymity.

“The standard process for onboarding of directors for an ARC is to seek prior approval of the RBI. In view of the urgency to operationalise NARCL quickly, soon after receipt of RBI licence, a few directors, including Mr Pradip Shah, were onboarded and an application was submitted to RBI for approval,” the SBI said.

After Shah stepped down, Subrata Biswas, a deputy managing director of SBI and one of the nominee directors of NARCL, was appointed as interim chairman.

Sources said that NARCL will seek fresh approval from RBI for appointing the chairman. One director’s post in the NARCL board is still vacant.