Synopsis: Last month, the Union government set up the National Asset Reconstruction Company Limited (NARCL) under the Companies Act. Two experts, Ajit Ranade and C.P. Chandrasekhar, discuss the bad bank proposal. We list out the key points. Must Read: NARCL: Need and Challenges – Explained, pointwise What is the need to bail out banks? There… Continue reading Will a bad bank fix India’s broken banking system?
What is the News? The Reserve Bank of India(RBI) has permitted lenders to transfer the loans that have been classified as fraud to asset reconstruction companies(ARCs). What is the current procedure? Currently, RBI norms require banks to make 100% provisions for the entire amount classified as fraud. Note: As per RBI’s annual report, lenders have… Continue reading RBI permits lenders to sell fraud loans to ARCs, paves way for resolution
What is the News? Cabinet has cleared a ₹30,600-crore guarantee programme for securities to be issued by the National Asset Reconstruction Company Limited(NARCL) for taking over and resolving non-performing assets(NPAs). What is NARCL? NARCL is India’s first-ever “Bad Bank”. It has been incorporated as an Asset Reconstruction Company (ARC) under the Companies Act. Purpose: It… Continue reading Government sets up ‘bad bank’ to clear the NPA mess
What is the News? The Union Government has approved a proposal that requires the government to guarantee Security Receipts(SR) issued by National Asset Reconstruction Company Ltd (NARCL) when buying non-performing assets (NPAs) from banks. This will clear the path for the launch of National Asset Reconstruction Company (NARCL). Note: Security Receipts (SR) are issued by ARCs… Continue reading Union Cabinet clears decks for National Asset Reconstruction Company