RBI Policy Boosts Junk Debt Market

The Reserve Bank of India (RBI) has unveiled a new policy that allows the securitisation of distressed assets, including non-performing loans (NPLs). This reform aims to enhance market liquidity, attract foreign investment, and provide banks with a more profitable alternative to selling bad loans at heavy discounts to Asset Reconstruction Companies (ARCs). While the policy opens new opportunities, it faces challenges such as accurate pricing and regulatory hurdles. This initiative is expected to stimulate the junk debt market, benefiting both lenders and investors.

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