‘Banks should not own bad loans bank’

With the government going ahead with the idea of creating a bad bank loans, RBI governor Raghuram Rajan on Tuesday made his concerns clear on the ownership of such a vehicle to tide over the bad loan menace, saying the lenders should hold a minority stake in any stressed assets fund.

“In our view, majority ownership by banks is probably not wise or warranted. Perhaps, some form of minority ownership with a number of other players coming in, in addition to the government, to provide capacity, especially in management of stressed assets would be appropriate,” Dr Rajan said. The comments came amid a confirmation from the Centre that it was serious on setting up a stressed asset fund.