Daily Current Affairs 2021 SBI's Padmakumar M Nair Named As CEO Of Proposed Bad Bank | Daily Current Affairs 2021

SBI’s Padmakumar M Nair Named As CEO Of Proposed Bad Bank

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Padmakumar M Nair of State Bank of India (SBI) has recently been named CEO of the National Asset Reconstruction Company Ltd. (NARCL), also called a bad bank.

  • NARCL is a proposed entity for taking over bad loans of lenders, predominantly public sector banks.
  • NARC is expected to be operational in June 2021.

About Padmakumar M Nair:

  • Currently, Nair is the Chief General Manager, in charge of the stressed assets resolution group (SARG) in SBI.
  • Prior to his elevation in 2020, he worked as general manager in the SARG from 2017.
  • He has worked mostly in the corporate banking segment in the last two decades.

Background:

  • Finance Minister Nirmala Sitharaman had announced the creation of a bad bank in 2021 Union Budget.
  • The bad bank will hold stressed assets which can be sold on to investors at a reduced price, Finance Minister Nirmala Sitharaman said in her Budget speech..

About Bad Bank:

  • Bad bank refers to a financial organization that takes over the bad assets of lenders and undertakes resolution.
  • The entities sell their non-performing assets to the bad banks at market price.
  • It was suggested by the Indian Banks Association.
  • The Confederation of Indian Industry (CII) had asked the Finance Ministry to establish “Multiple Bad Banks”.
  • The bad banks free the financial organizations from the burden of Non-Performing Assets. This will help them to focus more on new loans.
  • In February 2021, the Indian Banks Association ((IBA) had identified the bad loans that can be transferred to the proposed bad bank of the Central Government.

Note: Among the different entities operating in India in the asset reconstruction space, the oldest is Asset Reconstruction Company India (Arcil).

In fact, Arcil is also owned by a clutch of financial institutions, including State Bank of India (SBI), IDBI Bank, ICICI Bank (ICICI), Punjab National Bank (PNB), and Avenue India Resurgence Pte.

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