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Punjab National Bank (PNB) will be cutting its stake in National Asset Reconstruction Company (NARCL) to 9% by the end of this year, from the 12.06% stake it picked up with an intent to resolve Rs 2 trillion secured loans, Business Standard reported on Friday. The public sector lender has bought 18 million shares of NARCL at face value of Rs 10 per share. However, the bank in an exchange filing said that an approval from the Reserve Bank of India is required for the acquisition of shares.

It also stated that the time period for the transaction is set to be completed by the last quarter of FY 22.

NARCL will pay 18% of bad loans in cash

About Rs 89,000 crore will be aggregated as bad loans by NARCL in the first phase and would resolve them within five years. The centre earlier this month has approved the proposal to provide government guarantee worth Rs 30,600 crore to security receipts issued by NARCL.

NARCL will pay up to 15% of the acquisition cost, cash for bad loans which accounts for 18% and government guaranteed security receipts for the remaining 85%.

Public sector banks and financial institutions will own 51% stake, while private sector lenders will hold 49% stake in NARCL which is being dubbed as bad bank.