The Indian bank said on Friday it had taken 13.27% of the capital of the proposed private bank National Asset Reconstruction Company Ltd (NARCL). The lender subscribed for 1,9800,000 shares of NARCL for a cash consideration of Rs 19.80 crore, he said in a regulatory filing.
The 13.27% equity stake would be reduced to 9.90% by Dec.31, 2021, Indian Bank added.
Three state-owned lenders – SBI, Union Bank of India and PNB – had each acquired more than 12% stake in NARCL on Thursday.
NARCL, which is not yet operational, will take over bad debts from banks into its own account for swift resolution of bad debts.
Last month, Cabinet approved a proposal to provide a government guarantee worth Rs 30,600 crore to security receipts issued by NARCL.
NARCL will pay up to 15 percent of the agreed value of bad debts in cash and the remaining 85 percent would be government guaranteed collateral receipts.
51% will be owned by public service organizations and the remainder by private sector lenders. State-owned Canara Bank has expressed its intention to be the main sponsor of NARCL with a 12 percent stake.
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