Context: Just as Public Sector Bank’s health was recovering, with capital infusions, slowing slippages and higher provision coverage ratios, COVID has threatened to roll them back into the dead.
Issues with the Public Sector Banks (PSB’s):
Purpose of a Bad Bank:
Challenges with Bad Banks:
Way Ahead: Designing the Bad Bank
Conclusion: A well-capitalized, professionally-managed and time-bound bad bank could alleviate asset quality-related risk aversion among Indian PSBs.