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Letter to BS: It may be prudent to wait before setting up the bad bank

At this stage we don't really know the real extent of stressed assets created by this scourge

lockdown should be expected in order to prevent a second

This refers to “Bad bank may start with Rs 60K-crore NPAs; govt may put in Rs 10K crore” (May 12). While it is a good idea to have a bad bank, but certain factors need consideration.

Firstly, there must be a well-laid policy of putting stressed assets in the bad bank. Since it will have pre-pandemic as well as post-pandemic stressed assets in it, setting up this bank should not provide an opportunity to push stressed assets borne out of reckless lending or mala fide lending without carefully verifying them. The eagerness of some bankers to quickly shift these assets should be ...

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First Published: Mon, May 18 2020. 15:38 IST