The banking sector in India is in a crisis, with the burden of bad loans brewing for some time now. This is not surprising given the fact that public sector banks are saddled with bad loans within the banking system.
The Finance Ministry is working towards the creation of a public-funded asset reconstruction company (ARC).
It will buy off the bad debts and cleanse the banks’ balance sheets. Such a bailout with tax payer money is not justified because these large borrowers are medium-sized corporate and not farmers.