January 16, 2021
Proposals in this direction from as far back as 2016-17 remain only on paper yet The Reserve Bank of India (RBI) is open to looking at any proposal for setting up a bad bank, according to Reserve Bank of India (RBI) Governor Shaktikanta Das.
“A bad bank has been under discussion for a very long time. We have regulatory guidelines for Asset Reconstruction Companies (ARCs). If any proposal (for setting up a bad bank) comes, we are open to examining it and issuing required regulatory guidelines,” Das said in an interaction with participants after delivering the Nani Palkhivala Memorial Lecture.
Solve the primary problem in the banking sector December 28, 2020, 2:32 PM IST
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Banks appear to be gearing up for a surge in bad loans soon. At the moment, the extent of the damage triggered by the pandemic and lockdowns is not clear as even the bankruptcy code’s operation has been suspended. The government too appears to be readying for a surge in bad loans. Consequently, finance ministry officials have said that they are considering many options, including a new bad bank which may be floated by the government.
Need Multiple Bad Banks to Address NPA Issue, CII Tells Govt
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The Confederation of Indian Industry (CII) has urged the government to consider creation of multiple bad banks to address the adverse impact of non-performing assets accumulated by public sector banks in the recent past, and which have got further accentuated during the pandemic.
In its pre-budget memorandum submitted to the government, the industry body has recommended the government to consider enabling Foreign Portfolio Investors (FPIs) and Alternative Investment Funds (AIFs) to purchase NPAs.
CII President Uday Kotak said: In the aftermath of Covid, it is important to find a resolution mechanism through a market determined price discovery. With huge liquidity, both globally and domestically multiple bad banks can address this issue in a transparent manner and get the credit cycle back in action.
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