How does Warak Credit Bank work? Is it possible to pay off the debt of Rs 2 lakh crore .. !!
The central government accelerated the implementation of the Warak Bank Credit Scheme announced during the budget launch, as the Central Ministry of Finance is forced to reduce Warak’s debt burden, which is a major problem for banks in the sector Indian public, while at the same time Forcing the liquidation of Warak loans.
Warak Loan
Warak Credit Bank, also known as Bank National Asset Reconstruction Company Ltd (NARCL), was established in July and Parliament guaranteed Rs 30.6 billion on the 16th. But here comes the question How does this time can support Warak Credit Bank working…? What’s the use of that …?
NARCL System
NARCL is a system for claiming Warak loans from public sector banks, that is, loans that have been declared in default by banks.
Bank loans
Banks often lend large sums of money through mortgage loans. In this case, NARCL’s mission is to ease the burden on banks to sell distressed assets.
Debt above Rs 500 million
The NARCL system is only available for loans above Rs 500 million. It has a policy of not forcing lower loans. Banks are already working to pay off Warak’s debt.
Warak loan
However, being a system developed exclusively for Warak debts, its specialty is that not only is debt settlement faster, but it is also much easier for large investors and foreign investment firms to access to a single system, to seize assets trapped in Warak Debt.
Debts of Rs 2 lakh crore
Although NARCL has decided to withdraw 2 million rupees from Indian state-owned banks, it has chosen to pay off only Rs 89,000 crore of debt to large and heavily indebted customers.
How does it work …?
NARCL system checks Warak loan account assets at banks and determines specific amount. Of this, NARCL will advance 15 percent and confiscate the assets, with the remaining 85 percent as security receipts based on the 30.6 billion rupees guaranteed by the government paid. The main problem is that if the assets cannot be sold, the NARCL system will be seriously affected; On the one hand, this method will quickly reduce the banks’ bad debt losses.
Government completes
The government has also been informed that the security receipt issued by the NRCL to banks will be completed if the value of the Warak loan is low.
Only 5 years ..?!
On the one hand, the banking sector welcomes this, but market experts say it will not succeed. The main reason for this is that the government only guaranteed these Rs 30.6 billion for 5 years. The state of the NARL system after 5 years is a big question mark. It is also very difficult to pay off all of Warak’s debt.
Reserve Bank
Although the NARCL system was introduced in July, it has not yet been approved by the Reserve Bank and you cannot proceed with the next steps. The organization is expected to be licensed soon.
