---
title: "NARCL: India's Bad Bank Explained | Model Diplomat"
description: "National Asset Reconstruction Company Limited (NARCL) is India's government-backed entity that resolves stressed bank loans, aiding financial stability."
url: "https://modeldiplomat.com/learn/glossary/narcl-bad-bank"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- The National Asset Reconstruction Company Limited is India's government-backed asset reconstruction company that acquires large stressed bank loans for aggregated resolution.
- Why is NARCL called a 'bad bank' when it is not a bank?
- What is the 15:85 structure used by NARCL?
- How does NARCL differ from IDRCL?
- Does NARCL replace the Insolvency and Bankruptcy Code?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

The National Asset Reconstruction Company Limited is India's government-backed asset reconstruction company that acquires large stressed bank loans for aggregated resolution.

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## Timeline

1. 1 February 2021

   Its creation was announced by Finance Minister Nirmala Sitharaman in the Union Budget 2021-22, presented on , as a response to the chronic non-performing ass…

2. 15 September 2021

   The Indian Banks' Association drove the design, and the structure was endorsed by the Cabinet, which on approved a sovereign guarantee of up to ₹30,600 cror…

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Example

Finance Minister Nirmala Sitharaman announced NARCL in the Union Budget on 1 February 2021, and the Cabinet approved a ₹30,600 crore sovereign guarantee for its Security Receipts on 15 September 2021.

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