New Bad Bank in India: Vital Step to Wipe Off NPAs
On 15th September, 2021, Union Cabinet approved the central government guarantee of up to Rs 30,600 crore to back security receipts to be issued by the National Asset Reconstruction Company Limited (NARCL), also known as the Bad Bank.
Need for Bad Bank
- In RBI’s asset quality review (AQR), it was found that several banks showing a healthy balance sheet but have suppressed or hidden bad loans.
- Within the bank groups, public sector banks' (PSBs) GNPA ratio is 9.54 percent in March 2021.
- From the taxpayer’s perspective, the most worrisome fact was that an overwhelming proportion of NPAs was with the PSBs, ....
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