With these steps, Rajan hopes banks would be able to clean up their balance shee

ts by March 2017. Banks, however, want more time to achieve this. Even as the AR
C plan was being discussed in the finance ministry between May and July last yea
r, the government announced in August that it would provide Rs 70,000 crore towa
rds recapitalisation of banks over the coming four years. But there is a growing
sense in the government that mere recapitalisation without taking the bad loans
out may not suffice. Equity infusion by the government and the RBI would lend cr
edibility to the ARC. Government s direct presence will also put pressure on banks
and corporates to own up their bad loans and prompt them to shed these by takin
g a hair cut, said a source involved in the deliberations. A source said tackling
the bad loan mess requires multiple instruments. An ARC is a potent instrument, t
he source said. While there are more than a dozen private ARCs already registere
d under the SARFAESI Act, they have achieved little. The 15 ARCs have a combined
net worth of Rs 4,000 crore and as on March 2015, they have managed to resolve
less than a third of the assets acquired. (The) Government and RBI have to be inv
ested to bring credibility. Moreover, public sector banks are scared to sell to
private ARCs for fear that the quantum of hair cut can always be questioned by t
he government s auditor, vigilance or at worse be probed by the intelligence agenc
ies, the source said. - See more at: http://indianexpress.com/article/business/ec
onomy/govt-plans-to-defuse-ticking-bank-bomb/#sthash.y0JiGEFF.dpuf
With these steps, Rajan hopes banks would be able to clean up their balance shee
ts by March 2017. Banks, however, want more time to achieve this. Even as the AR
C plan was being discussed in the finance ministry between May and July last yea
r, the government announced in August that it would provide Rs 70,000 crore towa
rds recapitalisation of banks over the coming four years. But there is a growing
sense in the government that mere recapitalisation without taking the bad loans
out may not suffice. Equity infusion by the government and the RBI would lend cr
edibility to the ARC. Government s direct presence will also put pressure on banks
and corporates to own up their bad loans and prompt them to shed these by takin
g a hair cut, said a source involved in the deliberations. A source said tackling
the bad loan mess requires multiple instruments. An ARC is a potent instrument, t
he source said. While there are more than a dozen private ARCs already registere
d under the SARFAESI Act, they have achieved little. The 15 ARCs have a combined
net worth of Rs 4,000 crore and as on March 2015, they have managed to resolve
less than a third of the assets acquired. (The) Government and RBI have to be inv
ested to bring credibility. Moreover, public sector banks are scared to sell to
private ARCs for fear that the quantum of hair cut can always be questioned by t
he government s auditor, vigilance or at worse be probed by the intelligence agenc
ies, the source said. - See more at: http://indianexpress.com/article/business/ec
onomy/govt-plans-to-defuse-ticking-bank-bomb/#sthash.y0JiGEFF.dpuf

With these steps, Rajan hopes banks would be able to clean up their balance shee
ts by March 2017. Banks, however, want more time to achieve this. Even as the AR
C plan was being discussed in the finance ministry between May and July last yea
r, the government announced in August that it would provide Rs 70,000 crore towa
rds recapitalisation of banks over the coming four years. But there is a growing
sense in the government that mere recapitalisation without taking the bad loans
out may not suffice. Equity infusion by the government and the RBI would lend cr
edibility to the ARC. Government s direct presence will also put pressure on banks
and corporates to own up their bad loans and prompt them to shed these by takin
g a hair cut, said a source involved in the deliberations. A source said tackling
the bad loan mess requires multiple instruments. An ARC is a potent instrument, t
he source said. While there are more than a dozen private ARCs already registere
d under the SARFAESI Act, they have achieved little. The 15 ARCs have a combined
net worth of Rs 4,000 crore and as on March 2015, they have managed to resolve
less than a third of the assets acquired. (The) Government and RBI have to be inv

ested to bring credibility. Moreover, public sector banks are scared to sell to
private ARCs for fear that the quantum of hair cut can always be questioned by t
he government s auditor, vigilance or at worse be probed by the intelligence agenc
ies, the source said. - See more at: http://indianexpress.com/article/business/ec
onomy/govt-plans-to-defuse-ticking-bank-bomb/#sthash.y0JiGEFF.dpuf

With these steps, Rajan hopes banks would be able to clean up their balance shee
ts by March 2017. Banks, however, want more time to achieve this. Even as the AR
C plan was being discussed in the finance ministry between May and July last yea
r, the government announced in August that it would provide Rs 70,000 crore towa
rds recapitalisation of banks over the coming four years. But there is a growing
sense in the government that mere recapitalisation without taking the bad loans
out may not suffice. Equity infusion by the government and the RBI would lend cr
edibility to the ARC. Government s direct presence will also put pressure on banks
and corporates to own up their bad loans and prompt them to shed these by takin
g a hair cut, said a source involved in the deliberations. A source said tackling
the bad loan mess requires multiple instruments. An ARC is a potent instrument, t
he source said. While there are more than a dozen private ARCs already registere
d under the SARFAESI Act, they have achieved little. The 15 ARCs have a combined
net worth of Rs 4,000 crore and as on March 2015, they have managed to resolve
less than a third of the assets acquired. (The) Government and RBI have to be inv
ested to bring credibility. Moreover, public sector banks are scared to sell to
private ARCs for fear that the quantum of hair cut can always be questioned by t
he government s auditor, vigilance or at worse be probed by the intelligence agenc
ies, the source said. - See more at: http://indianexpress.com/article/business/ec
onomy/govt-plans-to-defuse-ticking-bank-bomb/#sthash.y0JiGEFF.dpuf

With these steps, Rajan hopes banks would be able to clean up their balance shee
ts by March 2017. Banks, however, want more time to achieve this. Even as the AR
C plan was being discussed in the finance ministry between May and July last yea
r, the government announced in August that it would provide Rs 70,000 crore towa
rds recapitalisation of banks over the coming four years. But there is a growing
sense in the government that mere recapitalisation without taking the bad loans
out may not suffice. Equity infusion by the government and the RBI would lend cr
edibility to the ARC. Government s direct presence will also put pressure on banks
and corporates to own up their bad loans and prompt them to shed these by takin
g a hair cut, said a source involved in the deliberations. A source said tackling
the bad loan mess requires multiple instruments. An ARC is a potent instrument, t
he source said. While there are more than a dozen private ARCs already registere
d under the SARFAESI Act, they have achieved little. The 15 ARCs have a combined
net worth of Rs 4,000 crore and as on March 2015, they have managed to resolve
less than a third of the assets acquired. (The) Government and RBI have to be inv
ested to bring credibility. Moreover, public sector banks are scared to sell to
private ARCs for fear that the quantum of hair cut can always be questioned by t
he government s auditor, vigilance or at worse be probed by the intelligence agenc
ies, the source said. - See more at: http://indianexpress.com/article/business/ec
onomy/govt-plans-to-defuse-ticking-bank-bomb/#sthash.y0JiGEFF.dpuf
With these steps, Rajan hopes banks would be able to clean up their balance shee
ts by March 2017. Banks, however, want more time to achieve this. Even as the AR
C plan was being discussed in the finance ministry between May and July last yea
r, the government announced in August that it would provide Rs 70,000 crore towa
rds recapitalisation of banks over the coming four years. But there is a growing
sense in the government that mere recapitalisation without taking the bad loans
out may not suffice. Equity infusion by the government and the RBI would lend cr

edibility to the ARC. Government s direct presence will also put pressure on banks
and corporates to own up their bad loans and prompt them to shed these by takin
g a hair cut, said a source involved in the deliberations. A source said tackling
the bad loan mess requires multiple instruments. An ARC is a potent instrument, t
he source said. While there are more than a dozen private ARCs already registere
d under the SARFAESI Act, they have achieved little. The 15 ARCs have a combined
net worth of Rs 4,000 crore and as on March 2015, they have managed to resolve
less than a third of the assets acquired. (The) Government and RBI have to be inv
ested to bring credibility. Moreover, public sector banks are scared to sell to
private ARCs for fear that the quantum of hair cut can always be questioned by t
he government s auditor, vigilance or at worse be probed by the intelligence agenc
ies, the source said. - See more at: http://indianexpress.com/article/business/ec
onomy/govt-plans-to-defuse-ticking-bank-bomb/#sthash.y0JiGEFF.dpuf