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Consider the following statements regarding National Asset Reconstruction Company Ltd (NARCL).
1. National Asset Reconstruction Company Ltd (NARCL) also called as bad bank is given legal recognition by the Corporate Affairs Ministry.
2. The Government of India has the maximum equity contribution to NARCL.
Which of the above statements is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'A'. Can you explain this answer?
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Verified Answer
Consider the following statements regarding National Asset Reconstruct...
The much-awaited bad bank — National Asset Reconstruction Company Ltd (NARCL) — has been incorporated, with the Corporate Affairs Ministry giving legal recognition.
The capital structure will have a component of both equity and debt. Public sector banks led by Canara Bank (which is likely to have 12 per cent stake) are expected to hold controlling stake in NARCL.
The other banks that are expected to pump in capital include State Bank of India, Bank of Baroda, Bank of India and IDBI Bank.
The government will not have any direct equity contribution to NARCL.
Most Upvoted Answer
Consider the following statements regarding National Asset Reconstruct...
Statement 1: National Asset Reconstruction Company Ltd (NARCL) also called as bad bank is given legal recognition by the Corporate Affairs Ministry.
The first statement is correct. National Asset Reconstruction Company Ltd (NARCL), commonly referred to as a bad bank, has been given legal recognition by the Corporate Affairs Ministry. The government has incorporated NARCL as a company under the Companies Act, 2013. The purpose of NARCL is to acquire and resolve stressed assets from banks and financial institutions. It will work towards resolving the bad loans problem in the banking sector.
The establishment of NARCL is part of the government's efforts to address the issue of non-performing assets (NPAs) or bad loans in the banking system. NPAs are loans that have not been repaid for a specified period and are considered to be at risk of default. These NPAs have been a major concern for the banking sector as they have a negative impact on the financial health of banks and hinder their lending capacity.
Statement 2: The Government of India has the maximum equity contribution to NARCL.
The second statement is incorrect. The Government of India does not have the maximum equity contribution to NARCL. The majority stake in NARCL is held by banks and financial institutions. The government's stake is limited to 49%, while the remaining 51% is held by banks and financial institutions. The government's role is primarily to facilitate the establishment and functioning of NARCL.
The ownership structure of NARCL includes public sector banks, private sector banks, and other financial institutions. The idea behind involving banks and financial institutions in the ownership structure is to ensure their active participation in the resolution process of stressed assets. This collaborative approach is expected to enhance transparency, accountability, and efficiency in resolving bad loans.
In conclusion, only statement 1 is correct. National Asset Reconstruction Company Ltd (NARCL), also known as a bad bank, has been given legal recognition by the Corporate Affairs Ministry. However, statement 2 is incorrect as the Government of India does not have the maximum equity contribution to NARCL.
The first statement is correct. National Asset Reconstruction Company Ltd (NARCL), commonly referred to as a bad bank, has been given legal recognition by the Corporate Affairs Ministry. The government has incorporated NARCL as a company under the Companies Act, 2013. The purpose of NARCL is to acquire and resolve stressed assets from banks and financial institutions. It will work towards resolving the bad loans problem in the banking sector.
The establishment of NARCL is part of the government's efforts to address the issue of non-performing assets (NPAs) or bad loans in the banking system. NPAs are loans that have not been repaid for a specified period and are considered to be at risk of default. These NPAs have been a major concern for the banking sector as they have a negative impact on the financial health of banks and hinder their lending capacity.
Statement 2: The Government of India has the maximum equity contribution to NARCL.
The second statement is incorrect. The Government of India does not have the maximum equity contribution to NARCL. The majority stake in NARCL is held by banks and financial institutions. The government's stake is limited to 49%, while the remaining 51% is held by banks and financial institutions. The government's role is primarily to facilitate the establishment and functioning of NARCL.
The ownership structure of NARCL includes public sector banks, private sector banks, and other financial institutions. The idea behind involving banks and financial institutions in the ownership structure is to ensure their active participation in the resolution process of stressed assets. This collaborative approach is expected to enhance transparency, accountability, and efficiency in resolving bad loans.
In conclusion, only statement 1 is correct. National Asset Reconstruction Company Ltd (NARCL), also known as a bad bank, has been given legal recognition by the Corporate Affairs Ministry. However, statement 2 is incorrect as the Government of India does not have the maximum equity contribution to NARCL.
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Community Answer
Consider the following statements regarding National Asset Reconstruct...
The much-awaited bad bank — National Asset Reconstruction Company Ltd (NARCL) — has been incorporated, with the Corporate Affairs Ministry giving legal recognition.
The capital structure will have a component of both equity and debt. Public sector banks led by Canara Bank (which is likely to have 12 per cent stake) are expected to hold controlling stake in NARCL.
The other banks that are expected to pump in capital include State Bank of India, Bank of Baroda, Bank of India and IDBI Bank.
The government will not have any direct equity contribution to NARCL.
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Consider the following statements regarding National Asset Reconstruction Company Ltd (NARCL).1. National Asset Reconstruction Company Ltd (NARCL) also called as bad bankis given legal recognition by the Corporate Affairs Ministry.2. The Government of India has the maximum equity contribution to NARCL.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?
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