However, it suffered delays after the Reserve Bank of India (RBI) said it was unhappy with the proposed structure. However, if counter-bids cross the minimum price, the initial bidder has the option to match the highest counter-bid.Īfter finance minister Nirmala Sitharaman announced plans to set up a bad bank in February 2021, bankers had said that about ₹2 trillion of bad loans would be gradually transferred to the entity. The first offer sticks if they don’t receive counter-bids beyond the minimum markup price. Under the Swiss Challenge method, after a bidder makes an offer, lenders publicly call for counter-bids to match it. Following this, they would also have to run a Swiss Challenge auction to meet regulatory requirements. They said banks had approached their respective boards to seek approval to sell the loans to NARCL at the current price offered by the bad bank. Given that the bad bank has made offers for just two of the 15 assets it had earmarked for the first tranche, bankers said it would certainly take another couple of months before the transfer of toxic assets could happen. However, Mint could not ascertain the name of the company. However, if the RBI later rejects the proposal, we would have to seek an extension for the asset reconstruction company (ARC) licence," the person said on condition of anonymity.Īfter the RBI deadline of 30 June, NARCL submitted a bid for another loan, the person cited above said. “Since the RBI has not rejected the proposal, we believe the request has been approved and are therefore going ahead with valuing other assets that are to be sold. It had asked whether the fact that a bid has been made before the due date can be considered as a start of operations," said the person cited above, adding the regulator has not responded yet, which the bad bank interprets as implicit approval from RBI. “The bad bank wrote to RBI late last month informing that the bid for Rainbow Papers has come before 30 June. If the RBI does not accept this bid as a demonstration of commencement of operation, NARCL must apply for an extension of the licence deadline, something it is trying to avoid.
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