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