[Feb]Asset reconstruction company declared in budget Flashcards
Explanatory notes
1) In the budget Govt announced to set up a Bad bank which will be an Asset Reconstruction Company (ARC) where Govt. will not put direct equity (ownership/share) but Public and Private Sector banks will put equity and Govt. may provide Sovereign Guarantee (details are not clear so dont go into it).
2) ARC will purchase the bad debts/loans from the banks and ARC will pay 15% in cash immediately and for 85% it will issue security receipts (paper) (which the banks may be able to encash in future)
3) Govt will set up Development Financial Institution called National Bank for Financing Infrastructure and Development (NaBFID) and it will drive the National Infrastructure Pipeline. Initially Govt. will won the bank but later on it will reduce its stake/ownership to 26% . India Infrastructure Finance Company Limited (IIFCL) which is a 100% Govt. owned company may be merged with NaBFID. For more details on Development Financial Institutions, you can refer this link https://t.me/VivekSingh_Economy/2689
4) The NaBFID will be regulated by RBI. NaBFID will issue bond and raise capital which will be used for financing infrastructure projects. This will also help in development and deepening of (secondary) Bond Market in India
What is Development Financial Institutions?
E:\UPSC Pre cum Mains\Vivek singh telegram Eco\DFI
Read shevtun 3rd para
