Bad Bank

In the wake of rising NPAs, Indian Banking Associations (IBA) and Economic Survey 2017-18 suggested the formation of Bad Banks.

  • A bad bank is technically an asset reconstruction company that buys bad loans(NPAs) from the commercial banks at a discount and tries to recover the money from the defaulter by providing a systematic solution over a period of time.
  • The idea of a bad bank seeks to reduce the NPAs in the banking sector and then revive lending and credit growth.

Impact

  • Easing Provisioning Requirement: Bad bank by way of absorbing NPAs, will ease the provisioning requirement by the banks and help ....
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