What exactly is the Indian bad bank ?

National Asset Reconstruction Company Limited (NARCL) is India’s first ever bad bank. A bad bank is a corporate structure that isolates risky assets held by banks in a separate entity. Bad bank is established to buy the non-performing assets from banks at a price determined by them. NACRL will acquire stressed assets worth about Rs 2 lakh crore from various commercial banks. It will pay up 15 percent of the agreed value for the loans in cash and the remaining 85 percent would be government guaranteed security deposits. To make this work, the government has approved a guarantee of Rs. 30,600 crore to the NARCL.