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.
WHAT IS FOREIGN DIRECT INVESTMENT (FDI) FDI Foreign direct investment (FDI) is when a company takes controlling ownership in a business entity in another country. With FDI, foreign companies are directly involved with day-to-day operations in the other country. This means they aren’t just bringing money with them, but also knowledge, skills and technology. Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company. Foreign Direct Investments are commonly made in open economies that have skilled workforce and growth prospect. FDIs not only bring money with them but also skills, technology and knowledge.
Asset management firm in the works to tackle bad loans of PSU banks
Experts believe that an AMC structure can be a viable option if the government has some stake in disposing of the bad loans.
Synopsis
The proposed AMC will work on a fee-based model. It will collate bad debt across banks and reach out to institutional investors, including distressed funds. Once the AMC secures funding for the collated asset, it will engage with ARCs to turn around the asset.
NEW DELHI: The government may set up an asset management firm to assist state-run lenders in disposing of their bad loans, leaving them to focus on core banking.
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.