Don't pass the buck: A bad bank will allow PSBs to evade accountability

The idea of a bad bank has been around for some time, but it is far from clear why the arguments for it have gotten stronger

The idea of a bad bank — that could take over the non-performing assets (NPAs) weighing down public sector banks — is making a comeback. Finance Minister Piyush Goyal said last week that a committee of senior bankers would examine the possibility of constituting an asset reconstruction company (ARC) or an asset management company (AMC) that would be given responsibility for these loans. Essentially such a new institution would serve the same purpose as a bad bank — it would take the troubled assets off the PSBs’ balance sheets, and allow them to resume normal operations.

ALSO READ: