New Delhi: Union Finance Minister Nirmala Sitharaman on Monday announced setting up of “bad banks”, a move to uplift the banking sector from bad loans.
As per the announcement, the government will set up a company– Asset Reconstruction and Management Company for Stressed Assets—which will take over the bad loans.
The idea was in discussion for years and has finally come into being.
The “bad bank” will take over the bad loans of various financial institutions which will help these institutions in cleaning their balance sheets.
Sitharaman also proposed a Rs 20,000 crore equity infusion for public sector banks to strengthen their banking services.
As per a Reserve Bank of India report, around 7.5 per cent loans in India are bad loans.