NEW DELHI: The government is looking at setting up an asset management company to help banks sell non-core assets including real estate, said two government officials aware of the development. The government wants state-run banks to sell these non-core assets to beef up capital.
The AMC would take over the asset, determine a valuation and sell it through a bidding process, one official said. “The proposed AMC will charge a small fee from the lender. The process will be transparent, thus shielding banks from any vigilance issues,” the official said. The AMC may also pool such assets of banks to get better valuations instead of selling them separately, the second official said. In the case of the National Securities Depository Ltd., at least three banks including Dena Bank hold minority shares.
“The AMC can sell the combined holding as a lot and get better valuations,” the official said. The AMC could also set up an alternative investment fund (AIF). “This will help banks as the AIF will immediately offer the valuation amount and it can later sell these assets at a more opportune time. The participants in such AIFs could be long-term investors like insurance companies and pension funds, both domestic and international,” the official added.
The structure could be similar to that of the Specified Undertaking of the Unit Trust of India (SUUTI), which currently holds the government’s stakes in blue chip companies such as ITCNSE 0.45 % and Axis BankNSE 0.74 %. SUUTI was set up in 2003 following the breakup of the Unit Trust of India after its flagship US-64 scheme collapsed. The government has been pushing banks to sell non-core assets in order to raise more capital to meet regulatory requirements.
A concept note has been prepared on the monetisation of assets of public sector banks and the Department of Investment and Public Asset Management will now take it forward, Subhash Garg, secretary in the department of economic affairs, said in an interview to ET earlier this month. About 13 public sector banks have already taken board approvals to tap the markets this financial year. Earlier this month, the government infused Rs 11,336 crore into five public sector banks including scam-hit Punjab National Bank, Corporation Bank and Andhra Bank to help them maintain capital requirements.