After presenting the Economic Survey Report 2020-21, Chief Economic Advisor KV Subramaniam also advocated Bad Bank. Earlier, Reserve Bank Governor Shaktikanta Das also gave the idea of bad bank.
In order to improve the condition of banks, in Budget 2021, Finance Minister Nirmala Sitharaman has announced the Bad Bank. Bad Bank will be known as Development Finance Institution. 20 thousand crore rupees have been announced for this. Explain that after presenting the Economic Survey Report 2020-21, Chief Economic Advisor KV Subramaniam also advocated Bad Bank. Earlier, Reserve Bank Governor Shaktikanta Das also gave the idea of bad bank.
Chief Economic Advisor (CEA) KV Subramanian advocated the establishment of a bad bank led by the private sector. He has said that Bad Bank is necessary to effectively deal with the problem of Non-Performing Assets (NPA). It is believed that after the withdrawal of the regulatory exemption given by the Reserve Bank due to Kovid-19, there may be a big increase in the bank’s debt.
Bad Bank will take the lender’s debt
The government has been considering the proposal of Bad Bank for a long time. Bad bank means a financial institution that will take over the lender’s subordinated debt and move forward the process of reconciliation. Lenders have been demanding the establishment of a bad bank for a long time, so that the pressure of their submerged debt can be reduced in this difficult time.
Will help to reduce NPA
Subramanian said, ‘The formation of Bad Bank will definitely help in the integration of some NPAs. It is also important that the implementation of Bad Bank in the private sector should be considered. This will speed up the decision making process. There is a delay in the resolution of submerged debt in the public sector due to ‘3C’. Three C refers to CBI, CVC and CAG.