NARCL's stressed asset acquisitions set to cross ₹1.68 trillion

The National Asset Reconstruction Company Limited (NARCL) has acquired 26 stressed accounts with an exposure of ₹156,323 crore in the last three financial years from FY23 to FY25, according to government sources. The NARCL is in the process of acquiring another six stressed accounts worth ₹11,779 crore, the sources told Business Standard, adding that put together, these acquisitions will be worth ₹168,102 crore, or over ₹1.68 trillion.

 

The NARCL has been set up to clean up the legacy stressed assets with an exposure of ₹500 crore and above in the Indian banking system. The company offers adaptable acquisition structures comprising an optimal mix of cash and security receipts (SRs) to the selling banks and financial institutions across sectors and geographies. The NARCL’s acquisition processes will be administered by their financial asset acquisition policy framed under the extant guidelines for Asset Reconstruction Companies (ARCs). 

 

One of the sources added that the NARCL’s future pipeline exposures spread across two categories — offers submitted and due diligence underway. Under the first category, one account, Shri Girija Alloys, has successfully completed the Swiss Challenge process, involving an exposure of ₹856 crore.

 

Additionally, two more accounts, Gannon Dunkerley & Co and BGR Energy Systems Ltd, are either currently undergoing or are set to initiate the Swiss Challenge process, together accounting for ₹5,328 crore in exposure. In the second category, three accounts — Jaypee Cement Corporation Ltd, Seya Industries Ltd, and SU Tolls Roads Pvt Ltd — are currently undergoing due diligence, with a combined exposure of ₹5,595 crore.

 

At the same time, the finance ministry has told the NARCL that there is a need for regular review of the performance of the company to expedite acquisition of stressed accounts, according to the official.

 

“Resolution of bad loans is set to become a renewed area of focus, with continuous engagement between lenders and the NARCL being facilitated through the Lenders Monitoring Committee, which will hold bi-monthly meetings to ensure more effective and timely resolution of assets,” the senior government official said.

 

“For FY26, seven accounts worth ₹11,738 crore of exposure have been identified for acquisition. The case for lowering threshold accounts to below ₹500 crore could be examined,” the source added. 

 

The Swiss Challenge process is a transparent bidding method used by entities like the NARCL to maximise value from the sale of stressed assets. It begins with an initial bid from an anchor bidder, which is then made public to invite competing offers. If a higher bid is received, the original bidder has the right to match it. If the original bidder doesn’t, the asset is sold to the highest bidder. This method ensures fair competition, prevents undervaluation, and helps banks recover more from bad loans.

 

Earlier, a committee was formed under the chairmanship of State Bank of India (SBI) to identify additional stressed assets. These assets could either be transferred to the NARCL or handled by any other ARC via the Swiss Challenge.

 

The senior government official said that the SBI-led committee identified 18 new stressed accounts for potential acquisition by the NARCL.

 

“Out of these, the NARCL has shortlisted three accounts for due diligence while the remaining 15 accounts have been dropped from consideration as they are already at an advanced stage of resolution, making them less viable for acquisition,” the source added.