Q. Consider the following statements regarding the National Asset Reconstruction Company Limited (NARCL):
1.It aims to address the growing problem of Non-Performing Assets (NPAs) in the banking sector.
2.NARCL focuses on smaller-value NPAs and distressed assets, whereas Asset Reconstruction Companies (ARCs) handles large-value stressed assets.
Which of the statement(s) given above is/are correct?
Answer: A
Notes:
Explanations –
Statement 1 is correct. NARCL was established to address and resolve the issue of large-value NPAs in India’s banking sector, helping banks clean up their balance sheets by aggregating and resolving stressed assets.
Statement 2 is incorrect. NARCL focuses on large-value NPAs, specifically those with an exposure of ₹500 crore and above, while traditional ARCs typically handle smaller-value NPAs. ARCs do not receive direct government support or guarantees for their operations. Whereas, NARCL benefits from a ₹30,600 crore government guarantee, which backs the security receipts (SRs) issued for acquiring stressed assets.
Source: The Hindu
