Advantages
- Frees up commercial bank’s capital for further lending.
- Promotes investment and growth in the economy.
- Centralizes NPA resolution with experts.
- Cleans up bank balance sheets.
- Government guarantee provides comfort to commercial banks selling NPAs.
Disadvantages
- Mere transfer of NPAs does not reduce overall NPA in the economy.
- The bad bank itself has to manage and recover these bad loans.
- Potential for moral hazard if banks become less cautious in lending.
- Financial burden on the government if guarantees are invoked.
- The text does not explicitly list disadvantages.