The bad bank, initially proposed by the IBA, was later endorsed by the government in the budget.
Punjab National Bank (PNB) on Saturday said it has identified bad loans worth Rs 8,000 crore that it would transfer to the National Asset Reconstruction Company (NARCL), which is likely to be operational from July.
“We are expecting everything to be put in place by June 30 and from July 1 onwards things will start functioning. The Indian Banks’ Association has already indicated this,” PNB managing director S.S. Mallikarjuna Rao told reporters.
While public sector banks together are expected to pick up a 51 per cent stake in the national ARC, Rao said PNB’s shareholding will be less than 10 percentage points. The bad bank, initially proposed by the IBA, was later endorsed by the government in the budget.
Rao said the PNB board has decided to exit Canara HSBC Oriental Bank of Commerce Life Insurance Company (CHOICE), and the sale process would take around 1-1.5 years as it would involve the appointment of intermediaries and engagement with advisers.
The bank expects to exit the insurance venture at a good valuation.
The state-owned bank had acquired a 23 per cent stake in the life insurer post amalgamation of the erstwhile Oriental Bank of Commerce (OBC) into itself last financial year.