Bandhan Bank is looking to further dispose of stressed assets to asset restructuring companies (ARCs) in a bid to improve its balance sheet.
The announcement has sent the bank’s stocks buzzing from early hours of trade on Wednesday.
The scrips closed at Rs 211.4, up 4.24 per cent over the previous close at the Bombay Stock Exchange.
The city headquartered lender in a disclosure to the stock exchanges said that following a meeting on March 21, 2023, the bank’s board has approved a proposal to transfer loans originating from banking units and written off portfolio with outstanding of Rs 2,614.03 crore as well as non-performing assets worth Rs 2,316.32 crore to an ARC.
“The bank has received a binding bid of Rs 369.20 crore for the written off portfolio and Rs 370.62 crore for the NPA portfolio on security receipts consideration basis.”
“The bank shall go for bidding as per Swiss challenge method and decision of sale shall be taken as per extant guidelines governing Swiss challenge method and relevant policy of the bank,” the lender said in its stock exchange disclosure on Tuesday.
Bandhan Bank last December had announced the sale of group loan and small business and agri loans worth Rs 8,897 crore to an asset restructuring company for a consideration of Rs 801 crore on security receipts basis pursuant to a Swiss challenge method.
The bank’s gross non-performing assets as on December 31, 2022, were at Rs 6,964.8 crore.
Around 73 per cent of the gross non-performing assets was from the emerging entrepreneurs’ business which mainly includes microfinance loans.
Brokerages maintained a cautious outlook with expectations of improvement in the asset quality trajectory from the fourth quarter.
“Gross slippages remained elevated at 16.3 per cent of loans mainly due to accelerated recognition from the MFI stress pool. As per management, the MFI stress pool now stands at a moderate 3 per cent of overall loans and 5 per cent of MFI loans and should thus lead to a contained stress flow in future,” said Emkay Global in a research report.
