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Setting up of Bad Banks good for the Indian Banking sector


The idea of establishing a bad bank is good for the Indian economy as it will certainly improve the health of the banking sector, observed by noted economist and Andhra University former Principal Prof.K Sreerama Murty here on Wednesday.

Participating as a chief guest on the seminar on Review the Budget 2021 organized by the Public Relations Society of India (PRSI), Visakhapatnam Chapter Prof. Sreerama Murty said the idea of setting up a bad bank to resolve the growing problem of non-performing assets (NPAs), or loans on which borrowers have defaulted, is the need of the hour. With commercial banks set to witness a spike in NPAs, or bad loans, in the wake of the contraction in the economy as a result of the Covid-19 pandemic, Reserve Bank of India (RBI) Governor Shaktikanta Das recently agreed to look at the proposal for the creation of a bad bank, Mr. Murthy added.


He said that countries like the US, Finland, Germany and Sweden have successfully experimented with bad asset resolution through a bad bank and this International experience should come in handy for us to model our bad bank. Stating further he said that Finance Minister Nirmala Sitharaman proposed many new measures in the Budget 2021 to prop up the flagging economy amid the Covid-19 pandemic and boost spending across sectors.

He hoped that India’s economy will return to the expected growth rate in the next four to five years because of present decisions taken by the finance minister and will lift a lot of firms. He explained how the present budget-helpful to different sectors in near future. PRSI South India Chairman U S Sarma, Visakhapatnam Chapter Chairman PLK Murthy, Vice-President R P Sharma, Secretary MKVL Narasimham, Treasurer NVNarasimham and others participated in the meeting.

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