Letter to BS: Bad bank a good idea but IBA might not be the right sponsor

The bank may ideally be floated by the government with it holding a 26% stake and the rest with some large banks

This refers to “Govt may leave it to IBA to set up bad bank” (July 8). The idea to create a bank exclusively to manage stressed assets of banks is welcome but the Indian Banks’ Association (IBA) might not be the right sponsor. First, the IBA is only an association of banks and not a corporate entity. It is optional for banks to be a member of IBA that has more of an advisory role.

Even assuming that this handicap is taken care of through changes in its constitution, the administration of such a strategically important bank is not feasible