8) The National ARC (Bad Bank) will help in resolution of bad | ECONOMY by VIVEK SINGH

8) The National ARC (Bad Bank) will help in resolution of bad assets. For example, suppose a creditor gave loan to company and company is not able to pay and the loan turned NPA. But if the creditor tries to recover its money through IBC or some other process, it may not get a good value for those assets because of the market condition and the creditor may need to wait for some time to realize better value. But creditors money is blocked and it wants urgent money, so the creditor is in dilemma. Now here Bad Bank comes. The bad bank will purchase the bad assets from the creditor (and it will provide some cash and securities to the creditor) and may hold on to those bad assets and will try to recover/sell only at the appropriate time. And this bad bank will be able to do so as it has liquidity. This liquidity is basically provided by those who will establish the bad bank.

9) We should focus on pre-IBC resolution mechanism also so that not to burden the NCLT. And these can be settled before going to IBC through mutual consensus, one time settlement, restructuring etc.