Bad Bank's chairman Karnam Sekar resigns after proposal to merge with IDRCL
Karnam Sekar, the chairman of the much-hyped 'bad bank', has resigned amid growing differences over the unique structure and functioning of the institution that was set up a year ago to acquire the sticky loans of high-street banks.
Sekar put in his papers on August 19, close on the heels of a proposal to merge National Asset Reconstruction Company of India (NARCL) — the bad bank — with India Debt Resolution Company Ltd (IDRCL) which acted as an 'agent' to NARCL, two persons aware of the developments told ET.
The merger proposal emanated from IDRCL which is headed by Diwakar Gupta, former managing director of State Bank of India (SBI).
The public sector NARCL and the private sector IDRCL were set up as twin organisations — with the former positioned as the 'principal' entity functioning as an asset reconstruction company while the latter operating as a resolution 'agent'. Sekar, former deputy MD of SBI, stepped down after this arrangement under the dual framework came under question.
Responding to queries from ET, NARCL managing director N Sunder said, «While it is true that Karnam Sekar has resigned from the board of NARCL, those were for strictly personal reasons only.
We are absolutely not aware of any recommendations from IDRCL.» Sekar did not response to calls and text messages.
Sources said that according to the suggestion made to the ministry, the two entities should be merged to optimise business opportunities and reduce cost. The ministry, however, may not be in favour of this, they said.
It's learnt that the issues cropped up at a town hall meeting between NARCL senior officials and employees on Monday.
Under the principal-agent relationship, NARCL acquires stressed loans from banks while IDRCL, serves as the
