<p>The Reserve Bank of India (RBI) has rejected private lender Yes Bank's application to establish an asset reconstruction company (ARC) to house its bad loans, citing a conflict of interest, according to a <a href="https://www.livemint.com/industry/banking/rbi-rejects-yes-bank-s-proposal-to-set-up-arc-11615722649056.html" target="_blank">report </a>by <em>Mint </em>quoting sources.</p>.<p>CEO Prashant Kumar-led Yes Bank had submitted the application in September and aimed to start operations within six months of the central bank's green signal.</p>.<p>The bank hoped to transfer bad loans worth nearly Rs 50,000 crore to the ARC, with many of its foreign investors eyeing the move favourably. As of December 31, the bank's bad loans make up nearly 15 per cent of its total assets. It has also initiated a debt recast of loans worth nearly Rs 8,000 crore, which are yet to be implemented.</p>.<p><strong>Also read — <a href="https://www.deccanherald.com/business/dh-exclusive-operating-profit-can-add-to-shareholder-return-be-patient-yes-bank-ceo-958559.html" target="_blank">DH Exclusive | Operating profit can add to shareholder return, be patient: Yes Bank CEO</a></strong></p>.<p>"Some of the biggest stressed loans on the books of Yes Bank that include the likes of Essel, Videocon, Housing Development and Infrastructure Ltd, Dewan Housing Finance Corp Ltd are declared cases of fraud and, as a result, these accounts cannot be transferred to the proposed ARC. Therefore, it would not have been very effective in resolving the situation that the bank faces presently," one of the sources is quoted as saying in the report.</p>.<p>Companies opt to set up a special body for their bad loans to clean up their balance sheets and quick resolution of default cases.</p>
<p>The Reserve Bank of India (RBI) has rejected private lender Yes Bank's application to establish an asset reconstruction company (ARC) to house its bad loans, citing a conflict of interest, according to a <a href="https://www.livemint.com/industry/banking/rbi-rejects-yes-bank-s-proposal-to-set-up-arc-11615722649056.html" target="_blank">report </a>by <em>Mint </em>quoting sources.</p>.<p>CEO Prashant Kumar-led Yes Bank had submitted the application in September and aimed to start operations within six months of the central bank's green signal.</p>.<p>The bank hoped to transfer bad loans worth nearly Rs 50,000 crore to the ARC, with many of its foreign investors eyeing the move favourably. As of December 31, the bank's bad loans make up nearly 15 per cent of its total assets. It has also initiated a debt recast of loans worth nearly Rs 8,000 crore, which are yet to be implemented.</p>.<p><strong>Also read — <a href="https://www.deccanherald.com/business/dh-exclusive-operating-profit-can-add-to-shareholder-return-be-patient-yes-bank-ceo-958559.html" target="_blank">DH Exclusive | Operating profit can add to shareholder return, be patient: Yes Bank CEO</a></strong></p>.<p>"Some of the biggest stressed loans on the books of Yes Bank that include the likes of Essel, Videocon, Housing Development and Infrastructure Ltd, Dewan Housing Finance Corp Ltd are declared cases of fraud and, as a result, these accounts cannot be transferred to the proposed ARC. Therefore, it would not have been very effective in resolving the situation that the bank faces presently," one of the sources is quoted as saying in the report.</p>.<p>Companies opt to set up a special body for their bad loans to clean up their balance sheets and quick resolution of default cases.</p>
