Letters: Transfer game

This refers to the report "Stressed assets' sale gathers pace" (April 15). State Bank of India sold Rs 3,500 crore of non-performing assets (NPAs) to asset reconstruction companies, which is not a significant part of the bank's stressed assets that amount to Rs 67,800 crore, as mentioned in the report. Further, selling stressed assets that have a good chance of revival and a fair amount of realisable value, to asset reconstruction companies (ARCs) is a mis-guided strategy. Why should lenders sell assets that have prospects of improving? Also, all the sales to ARCs imply huge losses to lenders since the former acquires them at huge discounts. The eligible NPAs of state-owned banks that are waiting to be sold to ARCs would make the latter sick. This is only a game of transfer of stressed assets from one set of institutions to another.

K V Rao Bangalore

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