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"The bad bank idea has been a point of discussion and debate in India for many years. But  now the idea has been operationalised with FM Nirmala Sitaraman laying down the road map for the National Asset Reconstruction Company to take off. The NARC that takes over the bad debts of the banks will be given government guarantee to issue Rs 30600 cr of security receipts. The banks will get 15 percent as cash and 85 percent as security receipts. Since the banks will remove these NPAs from their balance sheets, they can focus on lending activities that can help trigger a fresh round of credit off take that the economy badly needs. The FM's confirmation that Rs 5 lakh cr has already been recovered during the last 5 years is a positive signal that the burden will not be as high as initially feared. Nirmala Sitaraman's track record as a reformist finance minister has been further reinforced with this NARC announcement.

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