(LiveMint)
Finance minster Nirmala Sithraman on Monday, while presenting the Union Budget for 2021-21, announced that the government will set up an asset reconstruction company (ARC) and an asset management company (AMC) to house stressed assets currently in book of Indian banks.
Besides the setting up the long-awaited bad bank, the government will also infuse ₹20,000 crore into public sector banks as part of its recapitalisation plan. The Economic Survey, released 29 January, had called for a clean up of banks’ balance sheets after the forbearance to be accompanied by a recapitalisation.
While details of the bad bank are not immediately available, it will certainly ease the bad loan burden by taking over those assets and attempting recoveries. Experts have been arguing that a bad bank will be effective in cleaning up the bad loan menace so that banks can solely focus on credit growth, which has taken a hit following the coronavirus pandemic.
