Looking beyond the idea of a bad bank
Given the political and economic complexity, getting out of the present situation will not be easy
As the asset quality in the banking system continues to remain a drag for the Indian economy, the idea of a bad bank is beginning to attract renewed attention. The chief economic adviser to the government, Arvind Subramanian, recently said that India quickly needs to create a bad bank. In a speech last week, the deputy governor of the Reserve Bank of India (RBI), Viral Acharya dwelt upon the possible structure of asset management companies that can deal with bad assets. The latest Economic Survey proposed the idea of a public sector asset rehabilitation agency (PARA).