Canara Bank pares its stake in debt resolution firm IDRCL to 5 percent

Public sector lender Canara Bank on Thursday said it has reduced its stake in India Debt Resolution Company Ltd (IDRCL) to 5 percent.

The bad bank or the National Asset Reconstruction Company Ltd (NARCL) will acquire bad loans from banks to help clean up their books, while the IDRCL will handle the debt resolution process of these loans.

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With the current round of preferential allotment by IDRCL, equity stake of Canara Bank has now reduced to 5 percent from previous holding of 14.90 percent, the bank said in a regulatory filing.

Public sector banks will hold 51 percent stake in NARCL and 49 percent in the debt management company - IDRCL.

Indian Banks' Association (IBA) was entrusted with the task of setting up the bad bank. Last month, the IBA moved an application before the Reserve Bank of India for a licence to set up the Rs 6,000-crore NARCL.