Padmakumar Madhavan Nair Named CEO of ‘Bad Bank’
Padmakumar Madhavan Nair named CEO of ‘Bad Bank’
- Recently, Padmakumar Madhavan Nair of State Bank of India has been appointed as the CEO of Bad Bank. Be aware, the National Asset is a proposed unit of the Reconstruction Company.
- Presently, Mr. Nair is serving as the Chief General Manager of Stressed Assets of State Bank of India. He has been in this post since April 2020.
- Bad Bank is a financial organization that takes and resolves lenders’ bad assets. Financial institutions will sell their non-performing assets to bad banks at market value.
- It was suggested by the Indian Banks Association.
- The Confederation of Indian Industry had suggested to the Finance Ministry to set up several bad banks.
- Bad banks free financial organizations from the burden of non-performing assets (NPAs). This helps them to focus more on new loans.
- In February 2021, the Indian Banks Association identified bad loans that could be transferred to the proposed bad bank of the central government.
- Recently SBI formed the ‘Sudarshan Sen Committee’ to study about asset reconstruction companies in the country.
Why is bad bank necessary?
- In its Financial Stability Report, the Reserve Bank of India warned that, Non-Performing Assets – NPAs are increasing. It will be the highest in 22 years.
- Typically, large debtors have multiple creditors. In this case, bad banks can help solve coordination problems.
Source – PIB