Bandhan Bank is looking to offload a stack of soured housing finance loan worth Rs 775.62 crore to an asset reconstruction company through Swiss challenge bidding process.

“The board of directors of the bank has, on December 21, 2023, approved the proposal to transfer the bank’s housing finance NPA portfolio, having Days Past Due of more than 180 days, with an outstanding of Rs 775.62 crore (as on September 30, 2023), to asset reconstruction company,” the city headquartered bank said in a stock exchange filing.

“The bank has received a binding bid of Rs 280.39 crore (i.e., 36.15 per cent of the outstanding pool) for the said NPA portfolio, on outright cash consideration basis. The bank is going for bidding as per the Swiss Challenge method and the decision of sale shall be taken as per the extant guidelines governing the Swiss Challenge method and the relevant policy of the bank,” the filing said .

As per investor disclosure, the bank’s outstanding housing finance book as of September 30, 2023 was around Rs 26,750 crore of which the gross NPA was 4.1 per cent. The overall gross NPA of the bank was 7.3 per cent as of September 2023.

In a recent credit ratings report, Crisil has pointed out that the bank’s gross and net non-performing assets increased to 7.3 per cent and 2.3 per cent respectively, as on September 30, 2023, from 4.9 per cent and 1.2 per cent, respectively as on March 31, 2023. This increase was a factor of fresh slippages and reclassification of ECLGS (Emergency Credit Line Guarantee Scheme) loans as NPA during the period (earlier classified in Special Mention Accounts (SMA)-2).

“The slippage ratio increased to 10.5 per cent in fiscal 2023 from 2.4 per cent in fiscal 2019. During H1 2024 (fiscal), though moderated, it remained elevated at 6.3 per cent (annualized),” the report said.

“While the bank has been implementing various qualitative measures to strengthen collection practices and reinstate the credit discipline within vulnerable borrower groups, its effectiveness is yet to be determined.

"As against the earlier expectation of significant reduction in stressed assets to 3 per cent of gross advances towards the close of 2024, the bank’s stressed assets has remained elevated," the report said.