Indian Bank Association (IBA)

Indian Bank Association (IBA)

Subject: Economy

Context: As a preparation to asses capital required for formation of “Bad Bank” the IBA has asked the lenders to give details of stressed accounts over Rs 500 crore (fund and non-fund based as also debt investment).

Concept:

• The IBA is working with the Department of Financial Services and a few lenders to set up the ‘Bad Bank’.
• Fraud accounts, those in sight of resolution under the IBC and those under liquidation, accounts of financial service providers (such as NBFCs, mutual funds and broking firms), and quasi equity/equity and unsecured exposures have been excluded from the reporting format.

About proposed Bad Bank

• “Bad Banks” as proposed is ‘Asset Reconstruction Company (ARC)/Asset Management Company (AMC)’ structure, to clean up lenders’ books.
• It will be an integrated platform (Bad Bank) for all high-value non-performing assets (NPAs) will facilitate debt aggregation and help faster resolution

About IBA

• It is a representative body of management of banking in India operating in India or an association of Indian banks and financial institutions based in Mumbai.
• It was formed in 1946 for development, coordination and strengthening of Indian banking, and assist the member banks in various ways including implementation of new systems and adoption of standards among the members
• Public Sector Banks, Private Sector Banks, Foreign Banks having offices in India, Co-operative Banks, Regional Rural Banks and All India Financial Institution are its member.
• IBA currently represents 237 banking companies operating in India.