Explain the measures that are required to be taken by the government of India to make good assets with help of bad banks. (200 Words)
Refer - Business Line
Enrich the answer from other sources, if the question demands.
IAS Parliament 4 years
KEY POINTS
Although the Budget provides a glimmer of hope, the rise of the banking sector depends on various other factors.
Asset Reconstruction Company
· The need for cleaning up the debt from banks’ books assumes importance as it will help them raise capital and boost public confidence.
· Though the ARC can help banks reduce their NPAs (non-performing assets) and widen the capital base, it is still a makeshift solution.
· There is need for a lasting solution can be implemented in the mid-term by way of prudent lending and in the long-term by bringing in policies to make the debt market more active.
· ARCs certainly can help in better recovery of the assets, owing to their expertise in the area.
· Consolidation of small ARCs would help them bring in new business by charging competitive fees vis-a-vis the big ARCs.
· This will also help in efficient pricing and the competition would encourage the ARCs push for faster recovery of the stressed assets.
· The Department for Promotion of Industry and Internal Trade allowed foreign investment of up to 100 per cent in ARCs in 2016.
· Government support will be required as the realisation from the stressed assets will not fully clean bank balance-sheets as the amount realised will probably be less than recorded in books while transferring stressed assets to ARCs.
Saravanan 4 years
Pls review
IAS Parliament 4 years
Try to include sub-headings and merger of small ARCS. Keep Writing.
Dev 4 years
Please review and provide feedback
IAS Parliament 4 years
Good attempt. Keep Writing.
