State-backed bad bank to commence operation in Jan

The long-awaited state-sponsored bad bank is set to kick off its business just in time for the banking industry to dress up its balance sheet as the fiscal year comes to an end in a quarter. Banks may generate one-off gains as they have already fully provided for those sticky loans estimated at about Rs 82,000 crore in 22 accounts.

The bad bank plans to recruit as many as 50 professional executives for the asset management company (AMC) – India Debt Resolution Company Ltd (IDRCL) – to begin with, said people familiar with the matter. The bad bank’s regulatory framework is being worked out.

“We are currently busy setting up the infrastructure as we aim to generate write-backs for lenders by the end of this financial year,” one of the senior executives involved in the matter told.