SIDBI to set up asset reconstruction company

Mumbai: Small Industry Development Bank of India (SIDBI) will set up an asset reconstruction company along with other banks to recover bad loans in the small and medium enterprises (SME) sector.

The asset reconstruction company will have an initial capital of Rs100 crore and will start operations in the next six months, the small and medium enterprises lender said.

SIDBI is currently in talks with several banks, including Canara Bank, Punjab National Bank and United Bank of India, for setting up the asset reconstruction company and will seek a licence from the Reserve Bank in the next two months, SIDBI chairman and managing director R M Malla said.

SIDBI is likely to hold 15 per cent stake, while other 9-10 players will have 5-10 per cent share, Malla said, adding that some private banks may also be roped in.

The ARC would be looking at non-performing assets, estimated at Rs8,000 crore, of the commercial banks in the small and medium enterprises sector.