Renewal of federal guarantees, which expired last fiscal, is delaying the takeover of bad loans by the state-backed National Asset Reconstruction (NARCL), said people familiar with the stressed-assets aggregator’s operations. Bankers said without the guarantee, the NARCL cannot complete the deals, some of which have been pending since July last year. The government is pushing banks to offer more loans for sale to NARCL.
“The guarantee is a big issue no doubt but the fact of the matter is that NARCL has taken too long to conduct due diligence and make concrete offers,” said a person familiar with the matter. “And even when they have made offers, those have been too little for banks to take a call which has meant an unecessary back and forth. All these factors have jeapordised the NARCL idea.”