Amid the ongoing economic crisis, the Union Finance Minister Nirmala Sitharaman a few days ago announced the setting up of a ‘bad bank’, which the PM Modi-led Centre government had earlier proposed in its 2021-22 Union budget.
During her address on September 16, the Finance Minister also said the government has addressed many issues faced by the banking sector.
Jaya Vaidhyanathan, CEO, BCT Digital said, “I see the Finance Minister’s roadmap on bad banks as a welcome move. The Rs.30,600 crore government guarantee for security receipts issued by NARCL will be instrumental in improving recoverability. Eventually, this will be a pivotal factor in ensuring banks’ balance sheets are in good shape. Most critically, with NARCL posing as a bidder, individual ARCs will be obliged to bid for loans at competitive rates, faster, curbing extremely low buyouts, and circumventing delays. The fact that the ownership of NARCL is a joint PSB-private partnership elevates optimism and leaves expectations of recovery high. I also expect the involvement of the India Debt Resolution Company to expedite and add value to the entire process.”