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Government Wants to Create New Bad Banks
August 28, 2017
Modi government is planning to create a few more bad banks in the country. A ministerial panel has already been set up to clear the merger plans as proposed by the boards of the lenders. What’s more- taking the first step, India’s largest lender State Bank of India has created a template for the new “bad bank“. This is despite that it has 70,000 additional employees post the merger while the NPA ratio has increased almost to 10%.
A bad bank is a bank set up to buy the Non Performing Assets or the “bad loans” of another bank. This allows the latter to clear its balance sheet of the hurting assets.
