Former KPMG managing partner, Narayan Seshadri, is set to assume the role of Chairman at IDRCL, the government-backed bad bank, following the resignation of Diwakar Gupta. Gupta, in turn, is expected to take over as Chairman of NARCL. This leadership shift aims to expedite the resolution of bad loans, a process that has faced challenges and delays.
- Narayan Seshadri, a seasoned financial sector veteran, will take over as Chairman of IDRCL.
- Diwakar Gupta, former IDRCL Chairman, is anticipated to assume the role of Chairman at NARCL in the coming week.
- The IDRCL Chairman position became vacant as Diwakar Gupta resigned to join NARCL.
- Seshadri, currently an independent director at IDRCL, brings experience in revitalizing distressed companies.
Challenges Faced by NARCL
NARCL has encountered obstacles in meeting its bad loan resolution targets:
- Delays in government guarantee renewal.
- Lack of consensus with banks on optimal asset pricing.
- Differences between NARCL and primary agent IDRCL.
- Since its initiation in January 2022, NARCL has acquired only six companies.
- Total debt acquired stands at 14,166 crore, significantly below the 82,845-crore target set by SBI Chairman Dinesh Khara in January 2022.
- NARCL pays 15% of the loan amount in cash and the rest in security receipts, guaranteed by the government for five years.
Expectations from New Leadership
- Bankers anticipate that the introduction of new leaders at both NARCL and IDRCL will accelerate the pace of bad loan resolution, addressing the challenges faced so far.
Important Questions Related to Exams
Q1: Who is set to become the new Chairman of India Debt Resolution Co Ltd (IDRCL)?
A1: Former KPMG managing partner, Narayan Seshadri, is poised to take over as the new Chairman of IDRCL.
Q2: Why did the previous Chairman of IDRCL, Diwakar Gupta, resign?
A2: Diwakar Gupta resigned from IDRCL to assume the role of Chairman at the government-backed National Asset Reconstruction Co Ltd (NARCL).
Q3: What challenges has NARCL faced in its bad loan resolution efforts?
A3: NARCL has encountered delays in government guarantee renewal, a lack of consensus with banks on asset pricing, and differences with its primary agent IDRCL.