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FM Sitharaman to address media at 5 pm; announcement on bad bank proposal likely

FM Sitharaman to address media at 5 pm; announcement on bad bank proposal likely

During this press conference, Sitharaman is likely to make announcements related to the bad bank proposal cleared by the Cabinet

Union Finance Minister Nirmala Sitharaman Union Finance Minister Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman will address the media today at 5:00 pm. During this press conference, Sitharaman is likely to make announcements related to the bad bank proposal cleared by the Cabinet on Wednesday. As per the proposal cleared by the Cabinet, government guarantee will be provided to security receipts issued by the National Asset Reconstruction Company (NARCL) as part of resolution of bad loans.

This proposal further mentions that the proposed bank or NARCL will pay up to 15 per cent of the agreed value for loans in cash and the remaining 85 per cent will be government guaranteed security receipts. The government guarantee would be invoked in case of a loss against the threshold value. The Cabinet approval is essential since sovereign guarantee will be extended to security receipts issued by NARCL, news agency PTI reported.

The proposal is in line with the Finance Minister’s announcement in her Budget 2021-22 speech regarding high-level provisioning of stressed assets by public sector banks to clean up their books. “An Asset Reconstruction Company Limited and Asset Management Company would be set up to consolidate and take over the existing stressed debt,” Sitharaman said in her budget speech this year.  She mentioned that this will further manage and dispose of the assets to alternate investment funds and other potential investors for eventual value realization.

Meanwhile, the Finance Minister will chair the 45th GST Council meeting at 11 am on Friday in Lucknow. MoS Finance Pankaj Chaudhary, finance ministers of states and senior officers from Union Government and states will also be present during this meeting.

Edited by Mehak Agarwal; with PTI inputs

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