Shareholders of India’s bad bank put in an additional ₹74.6 Crore through a rights issue to meet minimum capital norms, enabling it to apply for a Reserve Bank of India (RBI) licence, showed documents available with the registrar of companies (RoC). Under a rights issue, a company allows only existing shareholders to participate in the fundraise.       
 

The management of India’s bad bank is discussing the modalities of how much lenders would have to cough up as yearly fee in exchange for managing their toxic assets, a person aware of the development said. Meanwhile, lenders have started looking for buyers for their stakes in ARCs to free up capital for NARCL. In February, PNB put its entire 10.01% stake in Arcil, one of India’s oldest ARCs with assets worth ₹12,000 Crore under management, for sale. This was followed by private lender IDBI Bank, which too has begun looking for a buyer to sell its 19.18% stake in Arcil.

Bank on Friday said its board has okayed a proposal to divest its entire stake of over 19 per cent in Arcil. The decision was taken at a meeting of the board of directors on Friday. The board has approved the proposal for sale of IDBI Bank's entire holding of 6,23,23,800 fully paid-up equity shares constituting 19.18 per cent of the total equity share capital of Asset Reconstruction Company (India) Ltd (Arcil), IDBI Bank said in a regulatory filing. In June this year, IDBI Bank had invited bids from interested parties for the takeover of its stake in the asset reconstruction company. Incorporated in 2002, Arcil is owned by SBI, IDBI, ICICI and PNB, besides strategic foreign investors such as Avenue Indian Resurgence Pte Ltd.

Authum Investment and Infrastructure Ltd will acquire second Anil Ambani group firm Reliance Commercial Finance after lenders approved its resolution plan, according to a person aware of the development. After several rounds of bidding and negotiations, Authum’s Rs 1,585 Crore (around $212.7 million) plan received over 80% vote share of the lenders which have already received Rs 1,240 Crore ($166 million) as cash. Besides Authum, domestic and foreign investors including JM Financial ARC, Edelweiss ARC, UGRO Capital and UV ARC and Asset Reconstruction Company (India) Ltd (Arcil) were in the race for the asset.

The Reserve Bank of India may tweak the ‘skin in the game’ criteria for Asset Reconstruction Companies (ARCs) in cases where they link-up with an investor to buy stressed assets from lenders on 100 per cent cash basis. Pallav Mohapatra, MD & CEO, Arcil, said: “What we want is that when an ARC, along with an investor, acquires a stressed asset on a 100 per cent cash basis from a bank, in such cases the regulator should, I think, reduce the 15 per cent requirement of contribution by ARCs. This can be reduced to 5 per cent.” Mohapatra underscored that investors are proactive when it comes to seeking regular updates on resolution of stressed assets and recovery. Hence, ARCs will be on their toes despite lower skin in the game.