Bad Bank: Will It Resolve The Npa Crisis?

On 15^th 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.

• A bad bank is an asset reconstruction company (ARC) that takes over the stressed assets of commercial banks, restructures them and sells them to investors, and recovers the money over some time.

Need for Bad Bank

The Indian economy has been slowing down due to the legacy non-performing assets (NPAs) in the banking sector that had turned the banks risk-averse.

• In RBI’s asset ....