ADB to assist Govt in setting up ARC

Asian Development Bank will assist the Government in setting up country’s first asset reconstruction company that will tackle non-performing assets of banks and FIs now at over Rs 1,00,000 crore. ADB is also considering picking up equity in the proposed company at a later stage, official sources told PTI here. “We have been asked to provide technical assistance to the Banking Division under Ministry of Finance for setting up the ARC,” ADB resident representative Frank Polman said.

Although Finance Minister Yashwant Sinha, in his budget proposals, set June 30 as the date by which a pilot project for the ARC would be set up, the company is likely to come up next year after going through the ADB report. Polman said the bank would submit its report on ARC by the end of the current year or early next year.

ADB is likely to charge a fee of $1 million for the proposed project that is intended to change the financial position of most public sector banks and FIs. The technical assistance for the ARC was part of the ADB’s country assistance programme under which financial aid to India has been doubled to $2 billion per annum during the next three years. Although the Manila-based multilateral funding agency has agreed to provide technical assistance, it has sought enabling laws to speed up recovery of NPAs.