Executives and economists yesterday called for the Government to create an agency that would buy loans from the country’s banks as part of efforts to thaw a freeze in lending that is starving even healthy companies of credit.
Gurjit Singh, the chief property development officer at Sorouh, called for the creation of a so-called “bad bank”, a special-purpose vehicle to buy distressed debt from local banks, as falling property prices lead to a rise in non-performing loans (NPLs). “We need to remove NPLs from the banks, so they can do their work,” he said.
Analysts said the ideas had merit. “It seems like a logical thing to do,” said Fahd Iqbal, the vice president of equity research at EFG-Hermes in Dubai. “Liquidity needs to be redirected to the market.”
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