Assessment of the proposed "bad bank" (holding company) for the resolution of stressed banking assets

Abstract

Honourable Finance Minister Ms. Nirmala Sitharaman announced in the annual Budget speech that there will be an asset reconstruction and management bank, referred to as "Bad Bank" (holding company), set up to tackle the amount of sourced debt weighing down the balance sheets of banks. This would not only be an attempt to clean their balance sheets but also to fasten the credit growth in the economy which is facing a prolonged slowdown. This reform would be extremely essential to boost infrastructural investment and revive the economy out of the pandemic.