Interviewtimes 
Confederation of Indian Industries (CII) has proposed for bad banks to the government to resolve the debt problem that is stalled in the balance sheets of government banks. The CII said the country needed several bad banks, not just one or two, for such loans.
Bad Bank is a financial institution that manages the purchases of loans held by other financial institutions and banks. The budget submitted to the Finance Ministry by the CII in the previous proposal referred to such banks.
Banking NPA problems have been on the rise since the introduction of the Corona Lockdown in the country. Therefore, the government should enact legislation that allows foreign portfolio investors (FPIs) and alternative investment funds (AIFs) to buy NPA accounts from banks, the CII said. CII President Uday Kotak said it was important to find a market-based solution to the problem in the aftermath.
So the bad bank proposal to the government is nothing new. This was also proposed in 2017. Increasing the NPA reduces the financial capacity of banks. The effect of which is felt in the market. The NPA problem of banks is said to be exacerbated by the epidemic in the country. The country’s banking sector is already in the throes of the epidemic. So while they are trying to get rid of it, it is now said that it will take a long time for banks to get out of the mudslide caused by the epidemic. “Only bad banks can save banks and governments from this disaster,” he said.
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