The Indian Banks’ Association (IBA) has begun a formal search process to identify a chief executive for the National Asset Reconstruction Company (NARCL), months after a State Bank of India (SBI) executive was appointed to lead the bad bank.

SBI chief general manager Padmakumar Nair is currently on secondment as MD & CEO at NARCL. Bankers in the know told FE that as a public-sector entity, NARCL must run an open selection process and Nair is also running for the role. Human resources consulting firm Aon is assisting IBA in the process.

Swaminathan J, managing director – risk, compliance and stressed assets resolution group, SBI, said, “The incumbent is also eligible to apply and will be part of the basket for consideration. The board will complete the selection process and appoint the MD-CEO on a regular basis, after obtaining RBI (Reserve Bank of India) approval.”

On Tuesday, the IBA invited applications from executives with over 25 years of experience in the financial services industry with over 10 years in stressed asset resolution, restructuring or corporate finance.

Applicants must be at least 45 years of age. In February, the IBA also began the process for recruiting second-rung and middle management positions.

NARCL has been set up by banks to aggregate and consolidate stressed assets of over Rs 500 crore for resolution. It intends to acquire stressed assets of about 2 lakh crore in phases. In January, SBI chairman Dinesh Khara had said the banking sector would transfer 15 large assets worth 50,000 crore to NARCL in FY22.

The other arm of the bad bank, the India Debt Resolution Company (IDRCL), will handle the debt resolution process for NARCL under an exclusive arrangement.

The arrangement will be on a principal-agent basis and the prerogative of issuing final approval for the resolution will lie with the NARCL as the principal.

As of January 28, a total of 38 accounts aggregating to Rs 82,845 crore had been identified for transfer to the NARCL. The institution will identify and acquire assets on a 15-85 cash-cum-security receipts (SR) structure, with government-backed SRs being issued in favour of the transferring lenders. Public sector banks have taken a majority stake in NARCL, while IDRCL will be majorly owned by private banks.

Banks believe that this public-private partnership will ensure that the bad bank gets the best of available talent to handle the large exposures while also offering the benefit of aggregation for stressed assets.