Resolving bad loans

It requires empowering bankers, not more institutions

Last week, Reserve Bank of India (RBI) Deputy Governor Viral V Acharya suggested yet another way of resolving the bad debt problem stifling the banking sector. He proposed the creation of two asset management companies — one private and another quasi-government — instead of a single “bad bank”. As such, there should be a Private Asset Management Company (PAMC) and a National Asset Management Company (NAMC). The PAMC will tackle sectors in which the stressed assets have an economic value in the short term such as metals, engineering and procurement, telecom and textiles. The NAMC, on the other hand, will