Transferring bad debt to ARC at book value just window dressing: Experts

Asset valuation should be left to market forces to help attract investors and create a healthy distressed debt market, say experts.

banks, npa, loans, recapitalisation, bad loans, loan restructuring, debt
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Indian banks are planning to transfer their non-performing assets to the National ARC in the next six months after the organisation gets a license from the Reserve Bank of India.

Dev Chatterjee Mumbai
A House panel recommendation to transfer banks’ bad loans to the proposed Asset Reconstruction Company (ARC) at book value will just lead to window dressing and not help in price discovery of the underlying asset, according to experts.
 
Instead of regulated pricing, ARC officials say, the non-performing asset (NPA) valuation should be left to market forces.
 
Banks will transfer their NPAs to the National ARC, or bad bank, as soon it gets a licence from the Reserve Bank of India. Lenders are planning to transfer NPAs worth Rs 2 trillion and hold up to 10 per cent stake

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First Published: Mar 23 2021 | 4:15 PM IST

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