Budget 2021-22: How favourable was it for digital lenders?
Fintechs, reaching out to the under-served - /iStockphoto×
Government support is crucial for fintechs to serve the financial requirements of the unbanked sections of society
While presenting this year’s Budget, the Finance Minister had an onerous responsibility. In the span of a pandemic hit year, India experienced its largest-ever GDP contraction and is also reeling from a severe crisis: both humanitarian and economic.
The whole financial system came to a grinding halt and there were many who were hoping to hear some good news in the Budget.
Fortunately, the reality lived up to the expectations and the Finance Minister was lauded for her bold and growth-oriented Budget. The huge focus on spending especially in critical sectors like Healthcare, where ₹2.23 lakh crore was allocated, infrastructure which got a 26 per cent hike in allocation compared to 2020-21, along with hiking the FDI cap in insurance from 49
Partha Ray - This year’s budget seems to have done a decent job of addressing the right issues to dispel the gloom in the economy, , Magazine 4 Feb 2021, Union Budget 2021-22
Bad bank is actually a good idea
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If the bad bank is designed with a good business model, it may address the twin balance sheet problem in India and capital adequacy concern too
The concept of bad bank has come to limelight as our Finance Minister announced in the Union Budget recently that an Asset Reconstruction Company (ARC) and Asset Management Company (AMC) would be established to address stressed debt of ₹2.25 lakh crore in the banking sector.
The main objectives of creation of the bad bank are (a) to clean the balance sheets of banks in India, (b) to enable the banks to reach the required level of capital adequacy by mobilising fresh capital from the market, and (c) to focus on credit growth to boost investment and ultimately economic growth. Essentially a bad bank would help the Indian banks to trim losses and concentrate on their core business of lending. Let us discuss the same in detail.
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