Economy News

Government to shift loans worth Rs 2.25 lakh crore to new entity

Here’s an exclusive news on the banking sector front. The government of India is bringing stress on the assets around Rs 2.25 lakh crore under “Bad Bank”.

This entity will be entirely funded and managed by the commercial banks of India. This proposed entity will come out soon.

Now let’s see what is it with the new plan, according to the proposed plan the bad loans cumulating above Rs 500 crore will be moved under the entity from 68-70 accounts.

The twist is, now the government will not have any kind of direct participation in terms of management control.

Going forward, the government will also not fund into these entities. Earlier the government of India used to have initiated consultations with the RBI on Bad Bank.

However, the initial capital investment is yet to be clarified.

Both the private sector and public sector banks will be funding into the entity. The Finance Minister also clarified that the entity in the form of an asset reconstruction company is known as “Bad Bank”.

Bad Banks helps the banking systems in crucial times, it helps the banks to eradicate the existing stocks incurred by the problematic loans.

It is moreover an entity that professionally absorbs existing stocks of NPAs which are non-performing assets.

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