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What is PARA in banking?

PARA means Public Sector Asset Rehabilitation Agency (PARA). It is also known as ‘Bad Bank.’Toxic assets can be removed from banks books and transferred to Bad Bank which has the sole purpose of aiding the recovery of risky assets. You can read about the Non Performing Assets (NPA) – Reasons, Classification, Impact, and Measures to Control NPA in the given link.

The ‘Bad Bank’ will be a 2 tiered structure. In tier-1, there will be an Asset Reconstruction Company (ARC) backed by the Government. In tier-2, there will be an Asset Management Company (AMC).

Further readings:

  1. RBI – Reserve Bank of India [UPSC Indian Economy Notes]
  2. Bad Banks – Idea Proposed by Indian Banking Association (IBA) Due to COVID-19

Related Links

Big Bank Reform RSTV – Recent mega-merger of national banks

Insolvency And Bankruptcy Code (IBC) – IBC Amendment Bill 2021 [UPSC Notes GS III]

Previous Years Economics Mains Questions for UPSC General Studies Paper – 3

Download Indian Economy Notes For UPSC Examination

K.V. Kamath Panel Report – RBI Committee on Restructuring of Loans

Mission Indradhanush for PSBs – Revamping Public Sector Banks

UPSC Mains General Studies Paper-III Strategy, Syllabus & Structure

Topic-Wise GS 3 Questions for UPSC Mains

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