Public sector lender Canara Bank on Thursday said it has reduced its stake in India Debt Resolution Company Ltd (IDRCL) to 5 per cent. 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. With the current round of preferential allotment by IDRCL, equity stake of Canara Bank has now reduced to 5 per cent from previous holding of 14.90 per cent, the bank said in a regulatory filing. Public sector banks will hold 51 per cent stake in NARCL and 49 per cent 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.