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Context: Recently, at a meeting of the Indian Banks’ Association, the idea of floating an asset reconstruction company (ARC) to improve the recovery from bad loans in the agricultural sector was discussed.
Need for such mechanism
Creating ARCs for Farm Sector
Recent Proposal: To improve recovery of bad loans in the agriculture sector, leading banks have made a pitch for setting up an ARC specifically to deal with collections and recovery of farm loans.
Arguments in Favour of ARCs for Farm Loans: As agricultural markets are dispersed, a single institution, as opposed to multiple banks, would be more suited to deal with collections and recoveries from farm loans, optimising the costs of the recovery.
Arguments Against Creating ARCs for Farm Loans
Alternatives to Help Farmers: There are also other ways to help farmers such as ensuring timely access to credit on more favourable terms.
Easing the NPA Sale Procedure: It is utmost necessary for a rigorous and a realistic approach to pricing between the banks and ARCs.
By: Shubham Tiwari ProfileResourcesReport error
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