The Reserve Bank of India (RBI) governor, Raghuram Rajans disagreement in government banks taking majority stakes in the proposed stressed-assets funds is justified. Rajan is right because if a bank controls the stressed-asset fund, it would amount to receivables from the sale being transferred from the bank to the fund.
What is more important to note is the fund would be hamstrung in quick decision making, key to its success, with historical baggage coming in the way. Its reluctance to take a haircut, key to the success of ARC or stressed assets fund, would be more pronounced vis-à-vis the one who has had nothing to do with processing or nursing the loan in the first place. Insider knowledge can be both titillating and haunting.
AFP
India …
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