The chairman of the National Asset Reconstruction Company of India (NARCL), Karnam Sekar, has resigned from his position citing disagreements concerning the structure and operation of the institution. The reported reason for his resignation is the proposed merger of NARCL with the India Debt Resolution Company Ltd (IDRCL), as stated by the Economic Times. The resignation came shortly after the suggestion of merging the public sector NARCL with IDRCL.
NARCL’s managing director, N Sunder, confirmed the development and clarified that the resignation of Karnam Sekar was driven solely by personal reasons. Sunder also mentioned that they were not aware of any recommendations from IDRCL.
According to reports, the proposal for merging the two entities was initially put forth by IDRCL, which is led by former State Bank of India managing director Diwakar Gupta. The suggestion was made to the Finance Ministry with the aim of enhancing business opportunities and reducing costs through consolidation.
However, the Finance Ministry’s stance on the merger proposal might not be favorable, and it is expected that the status quo will be maintained for the foreseeable future.
At present, NARCL operates as a “principal entity,” responsible for acquiring and aggregating bad loan accounts from banks, while IDRCL serves as a resolution agent, overseeing the resolution process.
The evolving situation surrounding the resignation of NARCL’s chairman and the proposed merger highlights the complex decisions and considerations that financial institutions and government bodies are faced with as they navigate challenges in the sector.