“Selling bad loans to ARCs should be the last resort and recovery should be the foremost task," the union said in its letter on 30 May. Lenders sell stressed loans to ARCs at a discount, either in exchange of cash or a mix of cash and security receipts. “ARCs buy the bad loans of banks along with the attached securities at a discounted value and sell them or recover them later and thus make profit. Naturally, when ARCs buy the bad loans at a discount, there is a loss to the Banks. Hence the real effort should be to recover the bad loans by taking stringent measures against the defaulting borrowers," the letter said.

Source: Mint May 31, 2021 06:11 UTC