NARCL headhunting for core team begins ahead of launch in July

Invites quotes from Aon to help it in the hiring process

Gearing up for its launch in July, the National Asset Reconstruction Company (NARCL) is in the process of finalising its core team and has invited quotes from a professional recruitment agency to help it in the hiring process.

NARCL and the new asset management company (AMC), through the Indian Banks’ Association, have invited quotes from human resources consultancy firm Aon to assist them with hiring professionals, said an official. Aon will also help in preparing a management charter.

Although hiring from the market will take a while, the functioning of NARCL will not be impacted. The contributing public sector banks (PSBs) will also help the ARC in providing the requisite manpower. 

“The management bandwidth will not be an issue in its functioning,” said another official. Some public sector bankers may also be sent on deputation to NARCL, he added. However, no decision has been taken on this yet. 

The selection will be merit-driven. More than a dozen people will be hired to manage intensive tasks.  

Aon did not respond to Business Standard’s email seeking comment. 

Both NARCL and the AMC are likely to appoint SBI Capital Markets and Oliver Wyman to provide advisory services, and Ernst & Young LLP (EY) as a tax consultant.

NARCL and the AMC will be majorly owned by PSBs. Both will function with private sector ethos, and pay market-linked remuneration.

A majority of PSBs have given their consent to hold up to 10 per cent stake in NARCL, and the investment will not require any regulatory approval. Investment by PSBs will ensure the new ARC does not face any capital issues.

Out of the available pool of Rs 2 trillion worth of bad loans that can be transferred to NARCL, PSBs, after filtering, have identified about Rs 89,000 crore worth of loans to be transferred in the first tranche. The same was also echoed by Union Bank of India MD Rajkiran Rai at a post-earnings press conference Monday. The board of NARCL would decide which assets it will acquire from banks, and will make an offer only if it finds the assets worthwhile, he said. 

These assets, or bad loans, are likely to be transferred to NARCL at a net book value, said the official quoted above. About 15 per cent will be in the form of a cash deal, and 85 per cent through security receipts. These modalities are still being finalised and will be ready by June-end, said the official quoted earlier.

The board will be formed after the company is registered. It will then formulate an acquisition and valuation policy, following which the ARC will approach lenders with offers. This is expected to happen in the second quarter of 2021-22, said a PSB executive.
 

Banks have also requested the Reserve Bank of India to allow transfer of fraud accounts to ARCs, which is currently prohibited by the regulator.