Focus now on faster NPA resolution to ensure NARCL's success: Analysts

Analysts expect the 'bad bank' to improve the balance sheet of banks, and aid incremental cash flow. However, a delayed resolution may dent the asset's value over time

Finance Minister Nirmala Sitharaman has announced setting up of a National Asset Reconstruction Company Ltd (NARCL), or a ‘Bad Bank’, with an intent to resolve bad loans within a period of five years.

While the move is a 'structurally positive development' as the focus remains on faster resolution of stressed assets, analysts believe the move is a little “late in the cycle.”

Back in 2016, Chris Wood, then managing director and equity strategist at CLSA, had said that the Narendra Modi-led government should put all the bad loans into one bad bank and let investors bid for those.