top edit examines the risks and rewards. Read it here. Other views examine the PM’s open support for the private sector, the outlook for the borrowing-driven growth plan, questions around the disengagement agreement in eastern Ladakh and the need for a “bad bank”.
Narendra Modi spoke eloquently on the wealth-creating prowess of the private sector in Parliament.
But
Debashis Basu points out that the rhetoric has not been matched by the kind of big bang reforms that would have enabled private business to function optimally. Which PM Modi should we believe, he asks here History will judge this Budget based on whether the government’s big bet on a public sector borrowing-driven growth revival works out, writes
Bad bank is actually a good idea
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If the bad bank is designed with a good business model, it may address the twin balance sheet problem in India and capital adequacy concern too
The concept of bad bank has come to limelight as our Finance Minister announced in the Union Budget recently that an Asset Reconstruction Company (ARC) and Asset Management Company (AMC) would be established to address stressed debt of ₹2.25 lakh crore in the banking sector.
The main objectives of creation of the bad bank are (a) to clean the balance sheets of banks in India, (b) to enable the banks to reach the required level of capital adequacy by mobilising fresh capital from the market, and (c) to focus on credit growth to boost investment and ultimately economic growth. Essentially a bad bank would help the Indian banks to trim losses and concentrate on their core business of lending. Let us discuss the same in detail.
Rebooting Economy 66: Is India facing credit deprivation to warrant corporation banks?
RBI s database, reports and other evidence show India is credit surplus; large industrial houses have high debt stress, and that easy credit poses serious macro-financial risks to the economy
Prasanna Mohanty | February 10, 2021 | Updated 18:39 IST
What compromises the Indian economy further is India s repeated failure to resolve stressed assets over the past few decades
In November 2020, an internal working group (IWG) of the Reserve Bank of India (RBI) recommended that India s large industrial houses be allowed to run banks to increase credit-to-GDP ratio from the current level of 50% to more than 150%, in line with many developed economies, for higher growth. Now Prof. Arvind Panagariya, former Niti Aayog vice-chairman, is claiming that India faces acute problem of credit deprivation to support the same cause.
Will transfer Rs 2.2 lakh crore NPAs to ‘bad bank’: Financial services secretary
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Synopsis
Financial services secretary Debasish Panda is responsible for implementing some of the key measures – from privatising two banks and a general insurer to setting up a development financial institution and faster payment of depositors stuck in ailing banks.
Financial services secretary Debasish Panda (File photo)
(This story originally appeared in on Feb 04, 2021)NEW DELHI: Financial services secretary Debasish Panda is responsible for implementing some of the key measures – from privatising two banks and a general insurer to setting up a development financial institution and faster payment of depositors stuck in ailing banks.
Sops for FPI investment in defaulted bonds to boost liquidity
February 05, 2021
Market experts also attribute the spike in FPI inflows to the recent spate of fundraising by Indian corporates
Market experts also attribute the spike in FPI inflows to the recent spate of fundraising by Indian corporates×
In order to further boost foreign portfolio investments in the corporate bond segment, the RBI has proposed to exempt FPI investment in defaulted corporate bonds from the short-term limit and the minimum residual maturity requirement under the Medium Term Framework. Detailed guidelines are being issued separately, said the RBI. At present, foreign portfolio investors can invest in security receipts and debt instruments issued by Asset Reconstruction Companies and debt instruments issued by an entity under the Corporate Insolvency Resolution Process, as per the resolution plan approved by the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, and these