The National Asset Reconstruction Company of India (NARCL), commonly referred to as the ‘bad bank’, has made an offer of Rs 260 crore to acquire the Rs 3,040-crore debt of Metenere Ltd. This equates to an 8.5% recovery for the lenders involved. A consortium of 10 lenders, with the State Bank of India at the helm, has accepted the offer under a 15:85 structure. They have also invited counter offers from other asset reconstruction companies. This move is aimed at resolving the debt situation of Metenere Ltd and allowing the lenders to recover a portion of their funds.
NARCL was set up as a part of the government’s plan to tackle the issue of non-performing assets (NPAs) in the banking sector. It aims to address the problem of bad loans by purchasing them from banks and financial institutions at a discount and attempting to recover as much as possible from the debtors. The acquisition of Metenere Ltd’s debt is a step towards achieving this goal. By acquiring the debt, NARCL will take over the responsibility of recovering the outstanding amount from the company.
The offer of Rs 260 crore represents an 8.5% recovery for the lenders, which is considered a reasonable outcome in such cases. The lenders are likely to accept the offer as it provides them with the prospect of recovering a significant portion of their funds. However, the deal is not yet finalized. Other asset reconstruction companies have the opportunity to submit counter offers and potentially acquire the debt of Metenere Ltd.
The move by NARCL and the consortium of lenders is expected to provide some relief to Metenere Ltd and its debtors. It will allow the company to resolve its debt situation and potentially revive its operations. Furthermore, the lenders will be able to recover a portion of the funds they had invested in the company. This is a positive outcome, considering the challenging financial circumstances faced by Metenere Ltd and the impact it had on the lenders.
Overall, the bid by NARCL for the debt of Metenere Ltd marks a significant development in the journey of the ‘bad bank’ in addressing the issue of NPAs. It demonstrates the effectiveness of this approach in resolving debt problems and providing relief to both the borrowers and the lenders. As the process moves forward, it will be interesting to see the final outcome and the impact it will have on the companies involved and the banking sector as a whole.
