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The National Asset Reconstruction Company (NARCL) has been given a blanket guarantee worth Rs 15,300 crore by the Centre, a report in the Economic Times (ET) said. The banks will now be able to rely on government guarantees on the stop security receipts (SRs) issued by the NARCL during the liquidation.
“The guarantee gives banks the option to fall back on an instrument in case recovery is not as expected. Senior NARCL officials are already in Delhi to sign the documents and activate the guarantee,” a person aware of the matter told ET.
The guarantee will be valid for five years and will cease to exist if the resolution is not made within five years. In 2021, the Centre had given a guarantee of Rs 30,600 crore to NARCL.
The aggregator has made bids for multiple accounts and the commercial banks are ready to transfer at least six proposals to NARCL. The biggest among these is Jaypee Infratech. It owes Rs 9,234 crore and NARCL offered Rs 3,570 crore to it for resolution.
Recently, NARCL also emerged as the highest bidder to take over two stressed entities of the Srei group as it submitted the “highest net present value bid of Rs 5,555 crore” among bidders.
NARCL’s net present value bid, submitted in the 10-hour-long “challenge mechanism” conducted by the committee of creditors (CoC) on Tuesday, constitutes Rs 3,200 crore in cash, a Rs 1000-crore jump from the previous plans offered, an official said.
Although NARCL has a clear advantage for taking control of Srei Infrastructure Finance and Srei Equipment Finance, Authum Investment and Infrastructure, another bidder in the insolvency resolution process for the two stressed assets, wass not out of the game even though it was behind marginally in the final and fifth financial challenge bidding round due to terms and conditions and legal compliance.
“As a result of failing to raise bids above Rs 4,800 crore, a consortium of Varde Partners and Arena Investors, another bidder in the resolution process, was out of the race during the third round,” the official added.
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