Bad bank, bad idea : M G Warrier

Sensible approach: Suresh Prabhu’s Railway Budget is quite sensible. He has concentrated more on improving passenger facilities and infrastructure than on giving sops. And he’s done all this without increasing fares. The proposal to sell

The Hindu Business Line, February 26, 2016
Bad bank, bad idea
RBI governor Raghuram Rajan has said that the concept of good bank/bad bank may not be relevant for India since much of the assets backing bank loans are viable or can be made viable. He was in favour of helping the banks clean up their balance sheets, recognising it as their responsibility.
This makes sense. PSBs, which have a higher level of stressed assets, are big enough to create their own arms for tackling wilful defaulters, and where loans become irrecoverable, there may not be much gain from ‘sale’ of portfolios at throwaway prices.
What PSBs need is a clear signal from the Centre to do their business professionally. There should be a clear differentiation between social responsibility and banks’ commercial business.
MG Warrier


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