India: How sound are the stressed asset ventures of banks?

India: How sound are the stressed asset ventures of banks?

Photo: Pradeep Gaur/Mint

There is some irony in the fact that banks, some of whom have a large chunk of bad loans on their own books, are now rushing to set up stressed asset ventures. We don’t really know what the thinking behind this is, but it would be reasonable to guess that they either see an opportunity in investing in stressed assets (which they partly helped create), or they think that they are best placed to resolve these stressed assets given adequate availability of capital and the correct structures.

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