New Delhi: The National Asset Reconstruction Company Ltd (NARCL) or the bad bank is expected to begin its operation by September, Punjab National Bank (PNB) Managing Director AK Goel said on Friday.

PNB has identified 8 stressed accounts worth Rs 2,486 crore for transfer to NARCL and these fully provided for accounts would be transferred by the end of second quarter, he said.

Asked how much the bank expects to realise from the resolution of these accounts, Goel, who is also the chairman of Indian Banks' Association (IBA) said, it will depend on a formula which has not been finalised yet.

The IBA was entrusted with the task of setting up the bad bank.

Goel said stressed loan worth Rs 50,000 crore would be transferred to NARCL in the first phase and subsequently more stressed accounts would be shifted.

In September last year, the government had announced a guarantee worth Rs 30,600 crore to security receipts issued by NARCL. The guarantee will be valid for five years.

NARCL will try to identify and acquire assets on 15:85 cash and security receipts (SRs) basis. While public sector banks have taken a majority stake in NARCL, its subsidiary India Debt Resolution Company Ltd (IDRCL) will be majority-owned by private sector banks.

In her Budget 2022 speech, Finance Minister Nirmala Sitharaman had announced that the government intends to set up a bad bank.

"An asset reconstruction company limited and asset management company would be set up to consolidate and take over the existing stressed debt," she had said in the Budget speech.

It will then manage and dispose of the assets to alternate investment funds and other potential investors for eventual value realisation, she had said.

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