Reserve Bank of India grants licence to NARCL under Sarfaesi Act

The NARCL has been incorporated under the Companies Act, and public sector banks will hold 51 per cent in the bad bank

The Reserve Bank of India (RBI) has granted the National Asset Reconstruction Company (NARCL), which is seeking to turn around bad loans worth Rs 2 trillion, the licence to register as an asset reconstruction company (ARC). 

The licence to NARCL, dubbed as bad bank, was granted by the central bank on Monday, said an official. The approval to the entity has been accorded under Section 3 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002.

Section 3 of SARFAESI Act states that an entity cannot start the business of securitisation or asset reconstruction without obtaining