UPSC CSE Mains Syllabus: GS-3- Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.

In news:

State Bank of India and the Indian Banks’ Association have once again revived the proposal for a bad bank. It is imperative, if India’s broken banks are to start lending again, to fuel growth, as the economy recovers from Covid. India needs a bad bank jointly owned by the banks themselves.

What is a bad bank:

Why bad bank now:

Why not sell it to the Asset reconstruction companies:

What about its ownership:

Some concerns:

Examples of Bad Bank Structures:

Private ARCs would be able to compete with the bad bank to buy stressed assets and pricing would become competitive.

Bad bank experiments have worked well around the world. India could consider it after assessing the benefits and issues around it.

Source:” Economic Times“.

Possible UPSC CSE Mains Question:

To bring a post-COVID recovery, the banks must free their bad-loan burden. How useful will a bad bank be in this regard?