RAS question
NARCL (National Asset Reconstruction Company Ltd) is also known as:
Correct answer: (A) Bad Bank.
NARCL, or National Asset Reconstruction Company Ltd, is popularly known as a bad bank because it was set up to acquire stressed assets from banks.
Explanation
NARCL is called a bad bank because its function is to take stressed assets off banks' books and support their resolution. The RBI Bulletin article refers to the establishment of the National Asset Reconstruction Company Ltd as a bad bank and notes that it provides an additional mechanism for resolving large stressed assets. The label does not mean the institution is bad; it means the institution deals with bad or stressed loans. NARCL is linked with IDRCL, which manages and resolves these assets. Bad Bank is the substantive name associated with NARCL, while Good Bank, Recovery Bank and Stress Bank are not used for it.
Why the other options are wrong
- (B) Good Bank is the opposite idea and does not describe NARCL, whose role is tied to stressed or non-performing assets.
- (C) Recovery Bank sounds related to resolution, but it is not the recognised name for NARCL in RBI usage.
- (D) Stress Bank refers loosely to the assets involved, but the established term for NARCL is Bad Bank, not Stress Bank.
Concept
Asset reconstruction and stressed-asset resolution are banking-sector reform concepts. They recur in RAS because bad loans, bank balance-sheet clean-up and institutional mechanisms like NARCL link current economic policy with core Indian Economy syllabus themes.