Centre may tell IBA to set up 'bad bank' with financial support from banks

The Centre is likely to tell the Indian Banks’ Association (IBA) to set up its proposed “bad bank” with financial support from banks, instead of asking the government to become a promoter. “If the banks want, they can set it up through their own funds,” a senior finance ministry official said.

In a proposal to the finance ministry and the Reserve Bank of India, the IBA had proposed a national-level asset reconstruction company (ARC) owned by the government with its capital infusion worth Rs 10,000 crore. This would have allowed the “bad bank” to take up bad loans from banks