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Money & Banking - Non-Performing Assets


Deutsche Bank, StanChart to join UTI's asset revamp co

Our Bureau

The company received RBI's licence on October 11 to operate as an ARC. It is already in talks with lenders to acquire stressed assets from them.

Mumbai , Oct. 14

TWO foreign banks have agreed to join public sector banks and financial institutions as equity partners in ASREC (India) Ltd, the asset reconstruction company (ARC) promoted by the Specified Undertaking of UTI (UTI-I).

Standard Chartered Bank, Deutsche Bank, Andhra Bank and IDBI have committed to subscribe to the company's equity. ASREC, currently capitalised at Rs 10 crore, will raise the equity to Rs 110 crore when banks and financial institutions subscribe to more capital, Mr Ajeet Prasad, Director, ASREC, told Business Line.

Mr Prasad said the company received RBI's licence on October 11 to operate as an ARC. Incorporated under the Securitisation Act, ASREC has an authorised capital of Rs 125 crore and six sponsors.

UTI-I currently holds 35 per cent equity in the company, followed by Bank of India, which has 22.5 per cent, Allahabad Bank, which has 16.5 per cent and Indian Bank, which holds 10 per cent. Besides, IL&FS owns 7.5 per cent equity and LIC had 5 per cent. Even after the other banks and financial institutions join as equity partners, UTI-I will remain the dominant shareholder with about 30 per cent equity.

Mr Prasad said the company is already in talks with lenders to acquire stressed assets from them. "We have a captive stock of NPAs (non-performing assets) of about Rs 35,000 crore to Rs 45,000 crore between our shareholders. UTI alone has stressed assets of book value Rs 7,000 crore. We hope to acquire assets from that stock at negotiated prices," he said.

Speaking on valuation of assets - a contentious area when it comes to lenders - he said it would be dealt with on a case-to-case basis. ASREC is currently in the process of identifying 10-15 independent valuers, he added.

While the public sector banks and financial institutions would largely supply the assets, foreign banks, which have a relatively low stock of NPAs, are expected to bring in the restructuring expertise to the ARC.

The Board of Directors comprises Mr V.K. Shunglu, former Comptroller and Auditor-General of India ; Dr L.N. Mitra, former Vice-Chancellor, National Law University, Jodhpur; Mr Mukund Chitale, Chartered Accountant; Mr Amalendu Ghosh, retired CGM, RBI; and Mr Ajeet Prasad, Executive Director, UTI AMC.

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