Budget 2021 | A look at the banking mess

FM Sitharaman said that an Asset Reconstruction Company and Asset Management Company would be set up to consolidate and take over the existing stressed debt

The Union Budget 2021-22 announced the long-overdue measure of setting up a bad bank for the stressed assets -- a move that brought a joyous cheer in the financial markets.

The Finance Minister said that an Asset Reconstruction Company and Asset Management Company would be set up to consolidate and take over the existing stressed debt and then manage and dispose of the assets to Alternate Investment Funds (AIFs) and other potential investors for eventual value realisation.

UNION BUDGET SPECIAL COVERAGE ONLY ON DH

However, this bad bank is only there for public sector lenders. The government hasn’t however announced how much capital it would allocate towards bad bank -- demand for which has been long overdue.