HomeFinance NewsThe mega Rs 44,500 crore bad loan sale

The mega Rs 44,500 crore bad loan sale

As many as 16 lenders are currently in the market to offload Rs 44,447 crore worth of non-performing loans (NPL), according to several sources CNBC-TV18 spoke to and tenders published by banks.

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By Ritu Singh  June 22, 2018, 12:36:41 PM IST (Updated)

The mega Rs 44,500 crore bad loan sale
As many as 16 lenders are in the market to offload bad loans, or non-performing assets (NPAs) worth Rs 44,447 crore, according to several sources CNBC-TV18 spoke to and tenders published by them.


Top public and private banks are looking to sell large portfolios of dud loans to asset reconstruction companies, financial institutions, banks and non-banking finance companies (NBFC), in an attempt to recover their dues.

Typically, banks queue up to sell junk loans towards the end of the financial year, but the trend seems to have reversed with banks lining up to offload NPLs just as the new financial year starts.

“This could be due to delays in recoveries through NCLT which had been expected in this quarter and banks have to show some progress on the NPA front and correct their ratios . There is also a heightened urgency on the part of banks to clean up their books as well," said Sunil Srivastava, former deputy managing director of State Bank of India.

State-run IDBI Bank has put up the largest chunk of NPLs on sale, with outstanding of more than Rs 21,000 crore, followed by Bank of Baroda, which is looking to sell Rs 7,407 crore of bad loans.

Andhra Bank and IDFC Bank are in the market to sell Rs 3,000 crore of NPLs each, followed by Canara Bank, which has put Rs 2,200 crore of bad loans for sale.

Punjab National Bank is soon expected to tap markets to sell Rs 1,650 crore of NPLs and State Bank of India has already offered Rs 1,400 crore for sale.

The other banks include UCO Bank with a Rs 890 crore portfolio of NPLs, Union Bank of India with Rs 760 crore and Jammu and Kashmir Bank with Rs 700 crore, according to sources.

Lenders including Allahabad Bank with Rs 562 crore, Laxmi Vilas Bank with Rs 550 crore, Dena Bank with Rs 500 crore, Bank of India with Rs 450 crore and Indian Overseas Bank with Rs 252 crore are also in the process of finding suitors for the sale of their non-performing assets.

Cosmos Co-operative Bank is also understood to have put Rs 126 crore of bad loans on the block.

As of the March 2018 quarter, the total gross non-performing assets of Indian banks had crossed Rs 10 lakh crore, with almost Rs 8.9 lakh crore contributed by public sector banks.

Banks have been grappling with asset quality pressure, amidst a slowing credit growth and tightening regulations, which have resulted in a sharp spike in bad loans.

While CNBC-TV18 reached out to the banks, they are yet to comment on the story.

While the Insolvency and Bankruptcy Code (IBC) was seen as a game-changer for NPL resolutions, so far the results have been disappointing, with only one of the first list of twelve defaulters identified by Reserve Bank of of India (RBI) finding resolution under National Company Law Tribunal (NCLT).

Under pressure to clean up their balance sheets, more and more banks are now looking to sell such accounts that are facing delays finding resolution under IBC through the asset reconstruction company (ARC) route instead.