Centre's New 'Bad Bank' May End up Inflating Loan Prices, Worries Market Participants: Report Union Budget 2021 announced setting up a new 'bad bank' to manage one of the world’s largest piles of stressed loans that may actually end up inflating prices. According to a report by Bloomberg, experts say they’ll be closely watching whether it could wind up inflating the price of distressed assets. That could happen if the creation of the bad bank reduces pressure on loan owners to price such debt at discounts attractive enough to draw other buyers, the argument goes. The report further adds that if the firm is owned by lenders including ones that originated soured assets bought at lower prices, that could force those banks to mark down the value of the securities they receive in exchange.