Why a bad bank is not the answer to India's debt dilemma

A government adviser says India already has five reasonably-sized asset reconstruction companies.

According to a Bloomberg report, there is no need for India to set up a new state-run fund manager to resolve the world’s highest stressed assets ratio as it already has institutions that can deal quickly with the problem, a top government adviser said.

Creating such an entity, a so-called bad bank, “can easily result in the loss of valuable time, perhaps as much as a year,” said Arvind Panagariya, vice chairman of Niti Aayog, the government’s top policy planning body, in an interview. 

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