RBI awaiting formal proposal on 'bad bank' from govt

Reserve Bank of India (RBI) Governor Shaktikanta Das said on Friday that the central bank is awaiting a formal proposal on the proposed bad bank.

Reserve Bank of India (RBI) Governor Shaktikanta Das said on Friday that the central bank is awaiting a formal proposal on the proposed bad bank. "We are waiting for a formal proposal from the government," he said in a press conference after the monetary policy announcement.

Besides, said Das, the RBI is also making a deep dive into non-performing assets (NPAs) of each bank to make the sector robust. In the Union Budget 2021, Finance Minister Nirmala Sitharaman announced the creation of a 'bad bank' in the form of an asset management or reconstruction company model to absorb stressed assets in the banking system.

'Bad bank' will purchase NPAs from banks at a discount. It will then attempt to achieve resolution in such accounts through a professional approach. The government plans to bring about Rs 2 lakh crore of bad loans under the proposed bad bank. (ANI)