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Aug 08, 2014
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Now, banks cannot offload bad loans that easily
Public sector banks, of late, have been aggressively selling their bad loans to asset reconstruction companies (ARCs) in a bid to lessen their pile of bad loans. But this may come to a standstill after the RBI’s new directive to securitisation and reconstruction companies. Here’s why.Sale of bad loans to ARCs gained momentum in 2013-14 mainly because banks were able to obtain better prices for these sales. ARCs which usually offer to take the loan off the banks’ books at a discount, were paying 55-60 per cent of the value of loans, as against just 30 per cent in the past.
Source -
http://www.thehindubusinessline.com
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