Govt may soon approve proposed bad bank, though with some riders
In the first phase, 70-80 stressed assets worth Rs 500 crore and above will be taken over by the ARC, adding up to about Rs 3 lakh crore of bad loans.
Synopsis
The rider is to ensure that non-performing assets (NPAs) are not sold at inflated prices. Also, the government will offer a sovereign guarantee to security receipts (SR) issued by the ARC only when the asset is bought under a certain haircut band.
The government is expected to soon clear the proposed asset reconstruction company (ARC) that will take over stressed debt, though the promised sovereign support for the bad bank is likely to come with some riders.