Create banks focused on bad loans crisis, says CII in budget suggestion

Market-determined price discovery mechanism for resolving stressed assets is important in the pandemic, says association

India must consider creating banks to address the “adverse impact” of bad loans public sector banks have accumulated during the coronavirus pandemic, the Confederation of Indian Industry (CII) has told the government.

The business association, in its pre-budget suggestions to the finance ministry, said market-determined price discovery mechanism for resolving stressed assets is important in the pandemic.

“With huge liquidity both globally and domestically multiple bad banks can address this issue in a transparent manner and get the credit cycle back in action,” said CII president Uday Kotak.

Bad loans, or non-performing assets (NPA) in industry parlance, are sold to