OECD urges India to cut stake in banks, insurance firms
Despite the reduction in non-performing loans and the creation of a 'bad bank', resolution procedures remain slow, says OECD
Despite the reduction in non-performing loans and the creation of a 'bad bank', resolution procedures remain slow, says OECD
Bad bank that was incorporated in July 2021 has not played a meaningful role so far, says Fitch
FM Sitharaman says ‘India Reset’ has been initiated through tech adoption, not just in software industries but via distribution of common services to citizens as well
The ARCs, the quintessential bad banks, can help the commercial banks focus on underwriting good loans, supporting GDP growth.
The new guarantee to all Security Receipt holders that in the event of a shortfall it is the government who will step in and pay from the public exchequer is a problematic development.
According to a BofA Securities report, the Covid-19 shock could delay India touching the GDP of Japan by three years. In their latest estimates, it will now happen by 2031 if the economy grows at 9%.
Asset reconstruction companies (ARCs) were set up in India to solve the NPA problem. India's 29 ARCs are a reflection of the success of the ecosystem in alleviating the stressed asset challenges.
Apart from recapitalisation, public sector banks get a shot in the arm in the form of ARC and AMC mechanisms to clean up their books.