NPA Crisis

Clean up the Balance Sheet of Banksop-ed snap


Setting up of an asset reconstruction company by govt is a good idea. But test will lie in giving its managers a free hand.

  1. It will prepare them to lend to the corporate sector as and when economic activity picks up speed.
  2. Non-performing assets (NPAs) and restructured loans of scheduled commercial banks have only increased over the last two years.
  3. They stood at over 11 per cent of total advances in September 2015.
  4. The idea of dipping into taxpayer money for the ARC’s equity is opposed by some on the grounds of it creating a “moral hazard”.
  5. But if banks and corporates are forced to pay for the mess, a state-backed ARC would bring credibility to the asset recovery programme.

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