New Delhi: The bad bank or a large asset reconstruction company (ARC) as announced by the finance minister Nirmala Sitharaman in the budget will be set up within a month or two, said a senior official in the ministry of finance.
“We hope that it happens in a month or two and it will give much-needed comfort to the banks,” said Debasish Panda, Financial Services Secretary in the ministry of finance.
In a post budget interaction with ETV Bharat, Debasish Panda said the new asset reconstruction company will be owned by public sector banks and some private sector banks can also join in.
"The Asset Reconstruction Company will be basically a warehouse for stressed assets. Thereafter it transfers those assets to the AMC, which is an asset management company, to manage it through a team of professionals, then try to sell it to a potential investor to maximize the value of those assets,” Panda told ETV Bharat.
Panda said it will lead to aggregation of NPAs and a faster and time-bound resolution of bad loans.
New ‘Bad Bank’ will acquire large assets
In response to a question about the need of another asset reconstruction company, which is also referred to as a Bad Bank as it will acquire bad loans or non-performing assets (NPAs) of banks, Debasish Panda said existing asset reconstruction companies cannot acquire large non-performing assets due to inadequate capital.
