Complaints of manipulation and irregularities are often associated with private companies. But what happens when a government-owned entity comes under scrutiny? A government-backed company is now facing serious questions after an alleged loss of around Rs 1,600 crore of public money. The National Asset Reconstruction Company Limited (NARCL) reportedly settled the loan of a defaulting company without conducting a price discovery process.
In government systems, assets and recoveries are generally subject to a bidding process. However, NARCL allegedly did not conduct any bidding before settling the debt.
Agson Global Pvt. Ltd. had borrowed thousands of crores of rupees from a consortium of banks. The company could not pay back the loans and the account finally turned into a non-performing asset (NPA). Since the dues were not paid, the matter was referred to the National Company Law Tribunal (NCLT) under insolvency proceedings.
Supreme Court Did Not Interfere
Agson Global later challenged the proceedings. However, the National Company Law Appellate Tribunal (NCLAT) treated the default as serious. The matter eventually reached the Supreme Court, which declined to interfere with the NCLAT order.
Subsequently, the banks transferred the stressed loan to the National Asset Reconstruction Company Limited (NARCL), a government-backed asset reconstruction platform.
NARCL’s Role in Recovering Stressed Loans
NARCL was established to resolve large stressed assets and recover bad loans from banks. According to documents accessed by Zee Media, NARCL was expected to recover Rs 2,172 crore in this case. It also held 100 percent voting rights in the Committee of Creditors (CoC), giving it complete control over decisions involving financial creditors.
Loan Settled for Rs 579 Crore
Despite this, NARCL reportedly settled the loan with Agson Global for only Rs 579 crore. In simple terms, Agson Global had outstanding dues of Rs 2,172 crore but was able to settle the matter by paying Rs 579 crore.
This has raised concerns because the difference between the recoverable amount and the settlement amount is approximately Rs 1,600 crore. Critics argue that public money may have suffered a significant loss as a result.
Questions Over Lack of Price Discovery
A key question being raised is why NARCL did not undertake a price discovery process. Had a bidding process been conducted, other interested buyers might have offered significantly higher amounts—possibly Rs 1,000 crore or even Rs 1,500 crore.
However, no bidding process was held, as was reported, which means potential bidders were never given a chance to participate. This raises questions about whether there was any undue understanding between the asset reconstruction company and the defaulting firm.
Agson Global Owns Around 30 Acres In Sonipat, Expects Rs 300 Crore Insurance Claim: Documents Reviewed By Zee Media
These factors could potentially have increased the value of the assets and attracted higher bids. However, it is alleged that NARCL did not verify these details before finalising the settlement.
Government-Owned ARC Under Scrutiny
Until now, allegations of irregularities in loan settlements were often directed at private asset reconstruction companies. NARCL itself was established about three years ago to improve the recovery of bad loans through a government-backed framework.
However, in this case, the government-owned asset reconstruction company has come under scrutiny, with questions being raised about the process followed in settling Agson Global’s debt.
