The rate of bad loans has come to such an alarming level that banks should be shown some ‘tough love’ by barring those non-performers from taking deposits and lending. I believe we are at crossroads and have an important choice to make.”Acharya has been an advocate of prudent practices and a quick clean-up of bad loans mess. He has been an advocate of bad bank , but has since abandoned the phrase since it conveys a different message, though the idea remains.“I have previously used the phrase “bad bank” for such ideas, over time I have come to dislike the title,” he said. “A ‘bad bank’ conveys the impression that this entity is to operate as a bank but has bad assets to start with. Resolution agencies set up as banks that originate or guarantee lending have ended up being future reckless lenders.”

Source: Economic Times February 21, 2017 19:00 UTC