Why would anyone want to buy banks with bad loans?

"Reserve Bank of India (RBI) deputy governor Viral Acharya has said that re-privatization of some government-owned banks may be an idea whose time has come," wrote Manas Chakravarty. "One, state ownership creates severe moral hazard of directing bank lending for politically expedient goals and bailouts when such lending goes bad. Second, state ownership creates the ability of state-owned banks from raising arm's length capital against state's stake, strangling their growth and keeping these banks -- and certainly their private capital base -- smaller than it need be," wrote Acharya. This was followed by an editorial in Mint also arguing for banks to be privatized. "Lending directed by the state rather than business calculations has meant that Indian banks have slipped into crisis mode at the end of every business cycle," it said. It is a nice way of saying that politicians force banks to lend our money to friends and relatives and to bribe the poor to win elections. Will the government do it? No. Because it will take away an enormous source of money for their own benefit. The waiver of loans to farmers to win recent assembly elections in UP is a perfect example, in which banks will take a hit of Rs 364 billion. Government control means that it is responsible for gross non performing assets, which have reached Rs 10 trillion.Falling profits and lower credit growth means that bad loans are only going to increase. Having committed to a fiscal deficit of 3.5% the government cannot use taxpayer funds to re-capitalize these banks. In India private banks are usually not allowed to fail. Global Trust Bank was taken over by Oriental Bank of Commerce, a public sector bank, while the Punjab National Bank took over Nedungadi Bank. After the subprime crisis in 2008 the US rescued banks because they were too big to fail. Not just banks. The government also controls hundreds of companies, listed on the Bombay Stock Exchange. In 2013-14 the top 41 public sector companies earned a total profit of Rs 1.54 trillion, paying total dividend of Rs 418 billion to the government. However, a large number public sector companies are making losses. The government wants to sell them off but there is a problem. To get absolute support of his MPs, the Prime Minister has appointed a horde of ministers. Some of them get extra perks for themselves and their families from control of public sector companies so they do not want these companies to be sold off. Still, these companies can be sold because a lot of them are sitting on large amounts of the most precious asset in India, which is land. Bank branches are usually in rented properties so who will buy a load of losses? Selling profitable banks while keeping the loss making ones makes no sense. A real pickle.