New Delhi, Feb 1 (KNN) In a bid to address the stressed assets in the banking system through an Asset Reconstruction Company (ARC) model, the Finance Minister Nirmala Sitharaman on Monday announced to set up a Bad bank.

This is expected to ease the bad loan burden by taking over those assets and attempting recoveries.

Besides the setting up the long-awaited bad bank, the government will also infuse Rs 20,000 crore into public sector banks as part of its recapitalisation plan.

A bad bank is a bank set up to buy the bad loans and other illiquid holdings of another financial institution. The entity holding significant nonperforming assets will sell these holdings to the bad bank at market price.