Finance Minister Nirmala Sitharaman announced that the security receipt issued by the bad bank to the banks will be a government guarantee.
New Delhi. Finance Minister Nirmala Sitharaman on Thursday announced the formation of the much-awaited Bad Bank. He said that the government will guarantee the security receipts issued to banks by the National Asset Reconstruction Company (NARCL) ie Bad Bank. This guarantee will be of Rs 30,600 crore. Let us tell you that in this year’s budget, the Finance Minister had announced about the establishment of a bad bank.
Addressing the press conference, the Finance Minister said that in the last six years, more than 5 lakh crore bad loans were recovered. More than 3 lakh crores have been recovered since March 2018. In 2018-19 alone, banks recovered a loan of Rs 1.2 lakh crore, which is a record in itself. During this time, the written-off loans of some companies were also recovered.
Announcement of formation of India Debt Resolution Company The
Finance Minister said that apart from Bad Bank, India Debt Management Company has also been formed. Public sector banks will have 49 per cent stake in the debt management company. At the same time, public sector banks will have 51 per cent stake in NARCL.
In the year 2021, only two banks suffered losses,
Sitharaman said that the financial condition of the banks has improved a lot due to the steps taken by the government. In the year 2018, out of 21 public sector banks, only two banks were profitable, but in the year 2021, only two banks made losses.
IBA has been entrusted with the task of setting up a
‘Bad Bank’. The proposed bad bank or NARCL (National Asset Reconstruction Co. Ltd) will pay 15 per cent of the agreed value for the loan in cash and the remaining 85 per cent in government-guaranteed security receipts. Last month, the IBA had applied to the RBI for the purpose of obtaining a license to set up NARCL.
What is Bad Bank
Experts say that a bad bank is not a bank. Rather it is an Asset Reconstruction Company (ARC). Yes, bad loans of banks will be transferred to this company. With this, banks will be able to give loans to more people easily and this will accelerate the economic growth of the country.
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