Indian Bank Gets Nod to Hold Over 30% Stake in Asset Reconstruction Company

In a significant move, the Indian government has granted an exemption to Indian Bank, allowing it to hold shares exceeding 30% in ASREC India Limited, an asset reconstruction company. This exemption was recommended by the Reserve Bank of India (RBI) and notified in the gazette on January 12, 2023.

Key Points of the Exemption

According to the gazette notification, the provisions of sub-section 2 of section 19 of the Banking Regulation Act shall not apply to Indian Bank regarding its holding shares of an amount exceeding thirty percent of the paid-up capital of ASREC India Limited.

This exemption is valid until March 31, 2025, and comes into effect from the date of its notification in the Official Gazette.

About ASREC India Limited

ASREC India Limited was established in October 2004 under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002. The company's primary objective is to acquire non-performing assets (NPAs) from banks and financial institutions at mutually agreed prices.

ASREC aims to maximize returns through innovative resolution strategies and positions itself as a multi-lender ARC in the public sector. By operating transparently with the flexibility of the private sector, the company strives to gain the confidence of the financial system in effectively resolving NPAs.

Other Shareholders of ASREC India Limited

Apart from Indian Bank, other shareholders of ASREC India Limited include LIC, Bank of India, Union Bank of India, and Deutsche Bank.

The government's exemption for Indian Bank to hold shares exceeding 30% in ASREC India Limited is a strategic move that supports the bank's role in resolving non-performing assets and contributing to the overall health of the financial system.