Even as the interest in buying out the development financial institution (DFI) turned full-scale bank, IDBI Bank, is gaining some momentum, there is a view that the government and the LIC should get the valuation upside as the operating environment is now positive for the bank with the setting up of bad bank, the turnaround in its operations, business synergy initiatives rolled out with LIC partnership and the gradual opening of the economy post second wave of pandemic. Recently, the bank also offloaded its entire stake in the Arcil, an asset reconstruction company. The sale of non-core assets is also expected to improve capital levels.

Aditya Birla Asset Reconstruction Company, Asset Reconstruction Company of India, Kotak Mahindra Bank-backed Phoenix ARC and JM Financial ARC are among 12 entities that have expressions of interest to acquire debt of distressed thermal power company Coastal Energen from State Bank of India, people aware of the matter said. Others who submitted expressions of interest by the September 9 deadline were ASREC (India), Omkara ARC, UV ARC, Prudent ARC, Alchemist ARC, Invest ARC, Maximum ARC and Paras ARC, the people said. Aditya Birla ARC, Arcil, Phoenix ARC, JM Financial ARC and Deutsche Bank did not respond to requests for comment.

There’s a suggestion from some quarters within official circles that the IL&FS should sell the debt/assets in the red category to asset reconstruction firm ARCIL, sources said. The challenges before IL&FS are time lines for approvals from NCLT and NCLAT, non-receipt of annuities amounting to over Rs 700 Crore, complex transactions involving PSUs and state government as joint venture partners, non-receipt of NOCs from JV partners and non-receipt of approval from government authorities like NHAI. Over 20 creditors have filed appeals with the Supreme Court against the Resolution Framework. Besides, there have been coercive creditor actions like debits without authorisation, refusal for meeting even “going concern payments” and refusal to create fixed deposits, interest-bearing instruments in contravention of court orders.

Shareholders of India’s bad bank put in an additional ₹74.6 Crore through a rights issue to meet minimum capital norms, enabling it to apply for a Reserve Bank of India (RBI) licence, showed documents available with the registrar of companies (RoC). Under a rights issue, a company allows only existing shareholders to participate in the fundraise.       
 

The management of India’s bad bank is discussing the modalities of how much lenders would have to cough up as yearly fee in exchange for managing their toxic assets, a person aware of the development said. Meanwhile, lenders have started looking for buyers for their stakes in ARCs to free up capital for NARCL. In February, PNB put its entire 10.01% stake in Arcil, one of India’s oldest ARCs with assets worth ₹12,000 Crore under management, for sale. This was followed by private lender IDBI Bank, which too has begun looking for a buyer to sell its 19.18% stake in Arcil.